April 26, 2022

As Governor of Central Bank of Nigeria (CBN), the mandate of Mr. Godwin Emefiele is clear: ensure monetary and price stability, maintain and manage external reserves, provide economic and financial advice to the Federal Government and promote a healthy financial system in Nigeria. These parameters are central to the existence of Reserve Banks (Central Banks) across the world.

In some countries, some central bank chiefs functioned during periods of plenty and economic buoyancy. Some are appointed during periods of economic drought. Some reserve bank CEOs last longer on the job than others. In some cases, their stay is determined by political decisions, usually change in government.

Alan Greenspan, a former United States Federal Reserve Chair, for instance, had a streak of longevity on the job overseeing the America Federal Reserve. An economist, he served for a record five terms as the 13th chair of the Federal Reserve of the US from 1987 to 2006. Appointed by President Ronald Reagan, a Republican, he got further reappointments by three succeeding US Presidents, handing him the historical record of working with four different US Presidents, both Republicans and Democrats.

Over all, he was regarded as one of the best Federal Reserve Chairs in US annals. But this was not because the US economy experienced boom all through his 19 years reign at the US regulatory bank.  Never! There were moments of drought and storms. His first baptism of fire was the October 1987 stock market crash which shook not just the US market but the global bourse. Here, he showed rare resilience and was able to ensure liquidity in the markets.

Emefiele’s tenure as CBN governor in more ways than one mirrors that of Greenspan.  Now in his 8^th year, Emefiele was appointed in June 2014 by President Goodluck Jonathan of the Peoples Democratic Party (PDP). He was reappointed in 2019 by President Muhammadu Buhari of the All Progressives Congress (APC), putting him in the exclusive club of being appointed by two different Nigerian Presidents both of different political parties in a democracy.

During his 19-year tenure, the US economy experienced two recessions, both with dire socio-economic consequences. He was also confronted with the Asian financial crisis of 1997 which echoed through Wall Street and by the law of resonance impacted on the US economy. Add to this, the September 11, 2001, terrorist attacks on the Twin Towers in US in which over 3,000 people died. Now known as 9/11, that terror attack struck a deadly blow to the heart of US economy. Again, Greenspan and his team were able to steady the ship. Many credit him with having a reputation for being strongly anti-inflation, and more at home with controlling prices than focusing on promoting full employment. Yet, in spite of the many storms that signposted his tenure, he’s still largely regarded as overseeing the longest official economic expansion in US history.

Emefiele’s tenure as CBN governor in more ways than one mirrors that of Greenspan.  Now in his 8^th year, Emefiele was appointed in June 2014 by President Goodluck Jonathan of the Peoples Democratic Party (PDP). He was reappointed in 2019 by President Muhammadu Buhari of the All Progressives Congress (APC), putting him in the exclusive club of being appointed by two different Nigerian Presidents both of different political parties in a democracy. And just like Greenspan was confronted with economic storms shortly after his appointment, Emefiele suffered similar fate. Barely one year after his 2014 appointment, global oil prices nosed south. Nigerian economy is sustained by earnings from crude oil. Indeed, the annual budget is pegged on the unit price of oil barrels in the international market. It was therefore a case of economic Golgotha for the nation by 2015 and onwards when crude oil price sustained a downward spiral. During his tenure, Emefiele has managed economic recessions and on each occasion, he has had to bend over backwards to spring the nation’s economy out of the brinks.

Managing federal reserves especially in seasons of socio-economic challenges is usually problematic. Twice when American economy relapsed into recession and even when it was upended by capital market collapse, Americans did not demand for the resignation of Greenspan. They understood that he was not the cause of the poor run of the economy. They knew he could not have orchestrated the attendant job losses and unemployment. They did not occupy the office of the Federal Reserve in manic rage.

This is why many analysts and watchers of the Nigerian economy frown at recent and sustained calls by some groups for Emefiele to resign. His critics attribute the nation’s lean economy to Emefiele. This theory would have made sense if it was Emefiele that caused the rupture of the bubble called crude oil especially when he was not in a position to determine or fix the price of crude oil in the international market. Emefiele was not responsible for the moribund Nigerian refineries. He was not responsible for the primitive inclination to greed exhibited by the governors who kicked vehemently against saving for the rainy day during the oil price boom of yesteryears; neither should be blamed for the inclement business environment in Nigeria where manufacturers had to provide their own electricity and worry about the movement of their goods and services because public transport is in terribly bad shape.

The list of the many woes that make Nigeria different from many other nations are many. And Emefiele did not create these woes. They have been of old including the lavish lifestyle of Nigerians, including top public officers turning a section of their apartments into vaults for warehousing forex, including the penchant of Nigerians to consume and patronise only imported products. Within the past four decades, Nigerian economy has depended solely on the export of one product: crude oil. Even refineries built to refine petroleum products for local consumption were neglected and gradually but steadily, they withered from percentage production to zero production. The refineries are today gigantic carcasses. And it’s not Emefiele that is responsible for the stealing of Nigeria’s crude oil. Those who should know say about 80 percent of the nation’s crude is stolen. Stealing of Nigeria’s crude between the point of production in the deep waters and the point of discharge predates the arrival of Emefiele at CBN. Besides, it’s not CBN that oversees the sale of oil. Relevant agencies within the nation’s oil and gas sector do. It’s therefore an unkind cut to blame Emefiele for the dipping fortunes of the economy.

To properly situate Emefiele’s place in the nation’s monetary and price stabilization history, it’s imperative to interrogate his actions and inactions within the context of global economic indices in the last seven years. His arrival at CBN was followed by global economic headwinds especially the crash in price of crude oil which represents about 95 per cent of Nigeria’s export revenue. This triggered a major shock for the Nigerian economy, leading to a 13-month recession in 2016. In comparison, the average price of crude oil from 2010 to 2014 was over $100/barrel but it crashed to as low as $30 / barrel with production cost of $25/barrel. Despite these storms, Emefiele’s deft management of the monetary policies helped to support governments at all levels including executing capital projects and running overhead costs. When you consider that many oil producers like Kuwait, Russia, Angola and Brunei had longer lasting recessions of between of 20 – 60 months with worse socio-economic outcomes, Nigerians would appreciate the magic of Emefiele.

Emefiele, more than any CBN governor, has defended the naira just to protect the future of Nigeria. He has shown courage, dared the forex grabbers and frustrated the smugglers. Above all, he has returned the nation to agriculture such that locally produced agricultural produce now form a huge part of our menu and have become a greater part of the raw materials for the nation’s primary sector.

Even in the face of the 2020 Covid-19 pandemic with its attendant lockdown  which plunged global economies to recession, Emefiele was able to mitigate the damage in a manner that made Nigeria economy perform better than the economies of some western nations. Countries like the USA had GDP falling in 2020 by -31% in Q2, UK by -19.4% in Q2, EU by -14.1% in Q2 and Nigeria by -6.1% in Q2.

It bears restating that Covid-19 brought out the best in Emefiele as CBN reeled out the following measures to absorb the pandemic shock: N100 billion health sector credit facility for operators in the sector. Nigeria now has two world-class cancer centres in Lagos and medical tourism has significantly reduced.

• A one-year extension of a moratorium on principal repayments for CBN intervention facilities;
• The reduction of the interest rate on intervention loans from 9 percent to 5 percent;
• Creation of N400 billion target credit facility for affected households and small and medium enterprises;
• Granting regulatory forbearance to banks to restructure terms of facilities in affected sectors;
• Improving forex supply to the CBN by directing oil companies and oil servicing companies to sell forex to the CBN rather than the Nigerian National Petroleum Company;
• Additional NGN100 billion intervention fund in healthcare loans to pharmaceutical companies and

healthcare practitioners intending to expand/build capacity;

• N1 trillion in loans to boost local manufacturing and production across critical sectors; among others.

CBN under Emefiele introduced several initiatives to reflate the economy chief of which is the Anchor Borrowers Programme (ABP) which returned the country to her first love: Agriculture.

The ABP was inaugurated in 2015 targeting commercial production of agricultural commodities including rice, maize, wheat and other cereals, cassava, potato and yam. Others include oil palm, tomato, cocoa, rubber, ginger, fish, poultry, other livestock and other commodities.

Besides the ABP, other such policy initiatives by CBN include the Agriculture Credit Guarantee Scheme (ACGS), Commercial Agriculture Credit Scheme, Agriculture Support Scheme, Nigerian Incentive-Based Risk Sharing in Agricultural Lending Programme (NISRAL) and Interest Draw-back Programme.

On the impact of these initiatives, Emefiele said: ‘’Our medium-term goal is to fast-track growth above historic average. Economic activities may reach pre-pandemic levels if the resilience of non-oil activities (especially agriculture and manufacturing sectors) are given continued impetus.’’

Emefiele, to his credit, has tinkered with all manner of policies to save the naira. He has applied safety measures including banning the funding of the importation of some items. All of this is to build a buffer around the naira. But this seems to infuriate some persons who prefer a free floating of the local currency.

Emefiele, more than any CBN governor, has defended the naira just to protect the future of Nigeria. He has shown courage, dared the forex grabbers and frustrated the smugglers. Above all, he has returned the nation to agriculture such that locally produced agricultural produce now form a huge part of our menu and have become a greater part of the raw materials for the nation’s primary sector.

Author: Jackson Ugbechie, writes from Abuja