*By Abba Adakole*
Public offices are held in trust for the people. Therefore occupiers of
public offices are the golden fish that have no hiding place. It is thus
instructive that they should justify their appointments by demonstrating
competence, accountability, discipline and leadership. These virtues
approximate the essence of every successful public office holder.
It is in the context of the parameters supra that economic analysts and
public affairs commentators have, in recent times, been giving appraisals
of the person of the Governor of Central Bank of Nigeria (CBN), Mr. Godwin
Emefiele and his era at the head of the apex bank’s command-room since
stepping in the saddle on June 3, 2014.
One such analysis that was agreeable to me and reflected my views was
published on the back page of Leadership newspaper of Thursday, February
21, 2019 titled: “Deconstructing Emefiele, CBN’s Command-Room Guru” wherein
the writer noted how the American media raised the profile of astute
economist and former chair of the US Federal Reserve Board from 1987 to
2006, Alan Greenspan, to a point that several observers likened him to a
“rock star” whereas he was ordinarily subdued in his public appearances.
The interesting contrast with Emefiele is that the media in Nigeria had not
extended a similar favour to CBN’s Emefiele. But, that seems to have
changed in the last two months. Emefiele has understandably been enjoying a
rave review of his first tenure as CBN governor in the media. Such reviews
of his era and achievements could either recommend him for tenure renewal
or for posterity’s positive judgment.
Emefiele has unarguably brought over three decades of both theoretical and
practical experience from top-flight academic and hands-on banking arenas
to the complex, fluid turf of central banking. In Buhari’s change
administration, Emefiele has been able to call on these governance skills
to successfully drive CBN’s command room. He can, in the next level, keep
fidelity to the major regulatory objectives of the CBN, to wit: maintaining
the external reserves, promoting monetary stability and a sound financial
environment, and acting as a banker of last resort.
At a bankers’s dinner in Lagos, last year, he reportedly alluded to a
number of recent developments that had markedly impacted emerging market
economies, including Nigeria. One such development was the rising global
interest rate due to sustained monetary policy tightening stance in the
United States and other advanced economies.
According to him, “This has consequently heightened fragilities, imbalances
and vulnerabilities in emerging markets. The Fed fund rate was raised
steadily to 2.25 percent in September 2018 with a forward guidance for one
more hike before the end of 2018 and three more in 2019. Similarly, the
Bank of England raised its policy rate in August 2018 for the first time
since 2008. Some emerging market economies, including India, Indonesia,
Mexico and Turkey have also raised interest rates in response to that shock.
“Consequently, Nigeria witnessed significant outflows of capital from
emerging markets, which led to immense pressures on exchange rates, FX
reserves, and sharp losses in the capital markets. Even Argentina, Brazil,
South Africa, Turkey and Russia have depreciated their currencies
significantly due to this shock. There have also been uneven fluctuations
in the international prices of commodities including crude oil, gold,
cocoa, etc.
“In fact, a critical dimension shaping this tumult is that the global
economy has experienced profound geopolitical and trade tensions. These
include strains between US and China, US and Iran, Russia and Western
Powers and more. These have unquestionably impacted the dynamics of global
trade. Also, these were exacerbated by rising tendencies and incidences of
protectionism, nationalism and anti-globalization – especially in the
western hemisphere.”
Consequently, Nigeria’s macro-economy experienced significant impulses over
the last few years, which triggered the country’s GDP collapse into a
recession with inflation spiraling to nearly 19 percent. The Naira-Dollar
exchange rate hit peaks never seen before. Both unemployment and poverty
also deteriorated. These adverse outcomes also revealed the country’s most
worrying structural fault lines, to wit: the persisting sole dependence on
oil and the inordinate size of the nation’s imports.
CBN had to deploy seven carefully planned measures to manage the negative
tensions of being an evolving player in the global village square,
including, among others, fine-tuning the extant monetary policy, rejigging
the external reserve management, stabilising the exchange rate management,
introducing the Naira-Renminbi Currency swap, given the growing importance
of the Chinese currency in global markets, and interventions in the
development financing sector.
Without a doubt, CBN’s policies and initiatives are yielding positive
results toward full correction of the underlying imbalances within the
Nigerian economy. The Ease-of-Doing-Business profile of the country is
improving, courtesy of the CBN interventions. The establishment of the
Credit Bureau and the National Collateral Registry, which improved access
to credit in the domestic economy, had made significant contributions.
Besides, the introduction of the transparent I&E FX Window, which increased
investor’s confidence and eased market sentiments, also boosted Nigeria’s
Ease of Doing Business indicator. Emefiele’s CBN has also effectively
managed the external reserves. Over the last few years, it has established
and maintained the decisive withdrawal of subsidy for the importation of 41
non-essential commodities.
Following the strict implementation of the policy, imports (fob) fell
steadily from US$15.7b in December 2014 to US$11.1b in June 2016 and US$7.2
b in June 2018. As it is, many entrepreneurs are taking advantage of this
policy to venture into the domestic production of the restricted items with
remarkable successes and great impact on employment even though The
Guardian in its editorial of March 26, 2019 held a different view that the
CBN had put Nigeria out of work by stopping fifth instant importers from
accessing forex for textile products. But it did not elucidate further the
ramifications of its argument.
Over all, the CBN on Emefiele’s watch has given traction to key
macroeconomic indicators and this has brought about the cyclical recovery
of the economy since the 2016 recession, and short-term prospects. For
instance, after five quarters of uninterrupted GDP contraction -beginning
from 2016Q1- the economy exited recession during the second quarter of
2017. This recovery has been sustained for five consecutive quarters. While
the pace of GDP growth slowed from 1.95 percent in the first quarter of
2018 to 1.50 percent the second quarter, short-term outlook remained good.
According to reports, the Nigerian economy likewise witnessed 18 straight
months of disinflation to 11.1 percent in July 2018, following a period of
rising inflationary pressure that peaked at 18.7 percent in January 2017.
Minor upticks, due to rising food prices, however, raised it to 11.3
percent in September 2018. The exchange rate has remained largely stable at
the FX markets with evident convergence continuing across all segments. At
the BDC segment, there was significant appreciation of the Naira from over
NGN525/US$ in February 2017, to about NGN359/US$ currently.
Another significant achievement by the CBN, according to consensus by
analysts, is the Anchor Borrowers’ Programme (ABP), aimed at stimulating
productive activities and development in the agricultural sector through
the provision of farm input both in cash and kind to small holder farmers
in order to improve farm yields; and, designed to stabilise supply of input
to agro-processors with a view to addressing the nation’s balance of
payments on food import and export.
The CBN claims a total number of 862, 239 hectares across 16 different
commodities had so far benefitted from the ABP, which had generated about
2.5 million jobs across the country. Subsequent to the success of the
programme with regard to cultivation of rice and maize, the Monetary Policy
Committee recommended that the programme be applied to other areas such as
palm oil, tomatoes, and fisheries, among others.
–
*Adakole, public affairs analyst, contributed this piece from Kaduna.*