Emefiele and the Economic Crisis Burden

Let us assume I do not like Mr. Godwin Emefiele, the governor of the Central Bank of Nigeria (CBN). Let us also assume that I believe every public officer in Nigeria deserves nothing but abuse, name-calling and scandalisation. Let us then say that by default, I am happy that Mr. Emefiele has been under severe media attacks since President Muhammadu Buhari assumed office. The simple conclusion I would have reached by now is that there is more to what I am reading than I am reading. It would no longer matter if I like Mr. Emefiele or not. I would now be getting concerned that some people are hell bent on getting rid of the CBN governor. I would now be asking myself if there is something else behind the anti-Emefiele emotions.

In less than one year, Emefiele has come under attacks for so many things. He has been criticised for not devaluing the naira; for restricting FX access to 41 imported items, including toothpicks and private jets; for making FX available to a “privileged few”; for making money available to the former National Security Adviser (NSA), Rtd. Colonel Sambo Dasuki, based on a presidential directive; for secretly employing the children of the rich and the powerful; for flying private jets “used by Diezani Alison-Madueke”; for making FX available to the wife of the president; and so long a list I have virtually lost count. It is now appearing as one week, one accusation against the CBN governor. While I am not in a position to say if these allegations are true or not, I am getting worried as a Nigerian that these attacks are unending. Are they mere coincidences? Or orchestrated?

I do not hold any brief for the CBN governor. Indeed, I have never been his fan. It is nothing personal or ideological. My problem with him from the beginning was the manner of his appointment by the former president, Goodluck Jonathan. Simply because Sanusi Lamido Sanusi (SLS) raised issues of accountability, Jonathan illegally removed him as governor of the CBN and appointed Emefiele to replace him. For that reason, I did not like the new governor. I thought he was a beneficiary of an unholy decision by the former president. I have therefore found it very difficult to warm up to Emefiele. I cannot deny that he had a great banking career, rising to the very top at Zenith Bank Plc, but that has never swayed me. As far as I was concerned, he benefitted from a dubious decision by Jonathan and he must pay for it.

Ironically, as an accountant, I should ordinarily have a tribal feeling for Emefiele. But this is not about sentiments; it is about my own moral persuasions. Jonathan took a political decision in removing Sanusi. That is my ground of dissent. I never agreed with those who said because Emefiele is an accountant he should not be a CBN governor, or that only an economist should be appointed as CBN governor. That is absolute rubbish.

Let us dissect some of the issues at stake. The first storm Emefiele ran into was the exchange rate. With crude oil prices crashing and FX reserves falling, the logical action was to allow the naira to depreciate in line with the new market realities. Unfortunately, some of these policy prescriptions are easier to make than to implement. Today, we are buying fuel at N86.50 (official price, bar scarcity). If the naira is devalued to N300 as many people want it, the pump price of petrol will move to at least N150 per litre (again, bar scarcity). If petrol is selling for N200 in the black market because of product scarcity, it follows then that even if you devalue the naira to N300, fuel could go for N600 per litre in times of scarcity. It is not as if we have found the solution to the multifarious problems facing us and that the CBN is the only thing holding us back. Our problems are rooted in historical structural and policy challenges that we are yet to address.

The bigger problem, however, is that some experts think they have the solution to the challenges Nigeria is experiencing. But things are not as easy as they appear. At no time in our history have we depended on imports as today. With a monthly bill of over $4 billion and FX revenue less than $1 billion, it would take magic to meet the need of everybody. If President Buhari fires Emefiele today and appoints somebody else, I still do not see the magic that will grow our FX reserves when crude oil prices are low and we cannot do anything about it. The notion that devaluing the naira will automatically attract FX inflow is also exaggerated. Emerging economies are taking a hit in the current global recession. It is not a Nigerian problem. Countries that have devalued are yet to start reporting an enormous flow of foreign investments. Some of these things are easier said than done.

The alleged secret employments by the CBN should be cause for worry, but the reports of “secrecy” and lack of regard for “federal character” have been denied by the central bank. This puts an analyst in a tight corner. Who should we believe? The CBN’s acting Director of Corporate Communications, Isaac Okorafor, was quoted in the press as saying:  “In the last two years, we have had cause to recruit specialists, and what the law says is that if we are going for that kind of recruitment we should apply for waiver, so that we can do targeted recruitment. The other issue is that there are states that are not well represented in the CBN, and in this case we focus on those states to recruits people of certain classes that we used to cover the shortfall in those states.” Okorafor’s explanation suggests that no law was broken in the process since waivers were duly secured. I am at a loss on what the real facts are. This is where journalists need to help us out.

However, if it is true that the necessary approvals were secured for the recruitment, the accusation will again fit perfectly into the conspiracy theory that there is more to the criticism of Emefiele than the eye can see. There seems to be a frantic search for evidence to nail him and remove him as CBN governor. An online newspaper recently wrote an editorial campaigning for the replacement of Emefiele with a serving or retired deputy governor. For someone who is yet to complete the second year of his five-year tenure, canvassing that he be replaced with a deputy governor is very curious. The impression you would get, even if you are not a fan of Emefiele, is that there is certainly a well-oiled campaign against him. This cannot be ordinary. It can’t be routine.

The irony surrounding Emefiele, however, is that he may still emerge the real winner at the end of the day. His position on the exchange rate has been well defended by President Buhari himself. The FX allocation ban, like every policy, is producing winners and losers. Just as there have been reports of factories closing down because of FX scarcity, we are also hearing encouraging stories of the gradual development of the agricultural value chain. We are reading reports of the benefits being enjoyed by local farmers who are getting fully supported on different fronts, including access to cheap finance provided by the CBN through the Bank of Agriculture. It is early in the day to conclude that the policy has failed, especially when the alternatives offer no magical returns.

 

Olubukayo Jamiu