Emefiele’s reappointment: The knocks, the praises

By Moses Obajemu

• Slow growth, inflation, high unemployment to continue
• Denies Nigeria turning point in monetary policy

Some financial market analysts and experts have expressed worry that Nigeria’s monetary policy, the expanding development mandate of the apex bank, and the regulation and supervision of financial institutions may not change any time soon with the reappointment of Godwin Emefiele for a second term of five years by president Mohammadu Buhari.

Specifically, they said Emefiele’s reappointment is unlikely to mark a turning point in the current stance of the CBN on monetary policy, direct involvement in the economy by the apex bank, and financial system regulation and supervision.

“Yet, these are areas where Nigeria must make strong improvements to overturn bleak medium term macro economic projections.

“Without a change in direction, we expect growth, inflation, and high unemployment to persist,” analysts at Afrinvest said.

They are also worried that some fiscal authorities in government, since 2015, have been working to undermine the independence of the CBN through their comments.

“Fiscal authorities have openly commented on the administration of exchange rate, import substitution policies and interest rate. The policy actions of the CBN have broadly aligned with these, making it hard to untangle the influence of the presidency. 

“We believe this has negative impact on investor confidence with the result being reduced foreign investment,” the analysts said.

They also said CBN has been supporting the federal government’s spending even beyond approved limit. 

Some experts too have also expressed reservation about Emefiele’s reappointment. Debo Ajayi, chairman, TAF, who is also an economist, said he had not really considered the governor to have performed well. He described some of the actions of the CBN as confusing because he got involved in fiscal policies instead of focusing on monetary policies, which was his key role.

Ajayi said, “Maybe things could have been worse than it actually is but also, I really do not see the CBN managing the economy very well, and yet, the exchange rate seems to have stabilised, but it is still not where it ought to be in terms of the valuation of the naira.

“So, I have not seen any major initiative from the CBN, but evidently, his boss may be looking at it from an angle we are not looking at it from that is making him to recommend him. However, from this side, I don’t see the governor to have done an exceptional job for which he is being recommended for another five years.

“But I do commend them from time to time for some of the initiatives. For instance, the recent one on access to credit in the creative industry is a fantastic one, better late than never. We see some initiatives sometimes like in the area of agriculture, but we have not seen these translate to tangible impact on the masses.”

A professor of economics at the Olabisi Onabanjo University, Ago Iwoye, Sheriffdeen Tella, said President Muhammadu Buhari re-appointed Emefiele because he felt that he had been able to maintain stable exchange rate and ensured that the inflation rate did not go haywire.

The don, who, however, expressed reservations about the CBN’s direct intervention in the agricultural and the real sectors, added that Emefiele must have earned his re-appointment having been able to help the Buhari’s administration to stabilise the nation’s monetary policy, as it had envisaged it to be.

He said, “I think the President re-appointed him because he is happy with what he has done in the monetary sector. He has stabilised the foreign exchange rate and managed the inflation rate. These must have fallen in line with the President’s policy, but I don’t believe the CBN should be directly involved in giving loans to farmers and those in the real sector of the economy.”

However, some groups too have lauded his reappointment by the president.

The Association of Bureau De Change Operators of Nigeria (ABCON), on Friday said that the reappointment of Godwin Emefiele as the CBN Governor for another term will sustain stability in the foreign exchange market.

ABCON’s President, Aminu Gwadabe said this while reacting to the re-appointment of Emefiele for another five-year term by President Muhammadu Buhari, in Lagos.

“The reappointment of Mr Godwin Emefiele is a good foundation to continuous foreign exchange market stability.

“The ABCON Exco and its entire members nationwide congratulate the CBN Governor on his reappointment,” Gwadabe said.

The ABCON chief noted that Emefiele had excelled in many ways which included, uniform exchange rates in the market, elimination of exchange rate volatility and the deepening of the foreign exchange market, with the introduction of multiple FX windows.

Other achievements by Emefiele included the diversification of the foreign exchange inflows through enhanced investor confidence/Diaspora remittances, reduction on the import dependence of the economy through several agricultural borrowers’ schemes and a ban on 42 items that could be readily produced in Nigeria.

The president added that the CBN chief was instrumental in formalising the informal retail foreign exchange market.

While congratulating the CBN boss for his achievements, Gwadabe stressed that ABCON expects the CBN governor to be as proactive as ever through robust engagements.

“We expect a continuous stakeholder’s engagement and the empowerment of BDCs for global best practices.

“We also expect a downward review of associated regulatory fees paid by BDCs and the upward review of the margin of BDC transactions.”

Similarly, a former director of the budgetary department of the CBN, Titus Okunronmu, described Emefiele’s re-appointment as a decision in the right direction, saying that the re-appointment would stabilise Nigeria’s macro-economic decisions.

The former CBN director said that Emefiele had done well, noting that “the country’s inflation rate is drastically coming down.

“He has achieved what is expected of him as the nation’s currency is now stable,’’ said Okunronmu.

“Monetary stability is a major issue in any economy. Emefiele has achieved this,” he noted.

Okunronmu said that it would be difficult to achieve monetary stability in a situation where the nation was running on deficit, observing that to have stabilised the monetary policies was a big achievement.