In most traditional African societies, authority tends to be associated with special lines of descent. These privileged descent groups form part of a social structure in which commoners as well as nobles base their status on descent, and usually determine their pattern of settlement and economic life. A drama that became public knowledge late 2013, finally came to a crescendo on Thursday, February 20th, 2014, when a President of humble beginning ‘dared’ to suspend a governor of royal descent hitherto saddled with the responsibility of leading the apex bank of the country.
The crux of the matter? The President and the executive arm of the government had the audacity to mismanage public funds, an exclusive preserve of the royal ex-appointee, and the ‘king’s court’ would have none of it. So, what started as an accusation of corruption against one of the public corporations under the purview of the executive by the noble ex-appointee, ended with a counter accusation of financial recklessness against the accuser, and subsequent suspension.
In the short time I’ve being around, I’ve learnt there are basically two G’s you do not go up against. The first is the sovereign God, and the second is the government. In choosing not to go to war with God, our royal ex-appointee should at least be credited as innately wise for recognizing his feebleness in the presence of the Almighty. But in choosing to go up against the government, he grossly underestimated the strength of even a dysfunctional government, while overestimating the powers of his office, and the limitations of his clout and royal status.
Could all these have been handled differently? Definitely yes. The role of the helmsman of the apex bank in any country is a very sensitive position. It is not a role for limelight hugging actors, neither is it a role for individuals with oral dysentery. It is a role of guarded utterances and discretion. The ex-appointee obviously treated the position as a door to his theatre of dreams, which eventually metamorphosed into a theatre of absurdities. His mandate was to engender stability in the polity, but many of his utterances were at variance with his mandate. Hopefully, the new appointee will be more guarded in his pronouncements. Should the ex-appointee have ignored the massive corruption being perpetuated by the different arms of government? Certainly not, but it is hypocritical to constantly barrage a system you are part and parcel of. There is an honorable path called resignation. Unfortunately, it is alien to most office holders in this clime.
Could the egregiously corrupt government on their part have handled things more methodologically? Again, yes, they could have. For one, the government could have displayed some common sense by showing some semblance of tackling the scourge called corruption rather than the obvious support for the impunity that currently reigns supreme. Also, the ex-appointee’s tenure was due to be over in a few months, it wouldn’t hurt the executive to exercise some restraint and wait it out. Otherwise, they could have first announced the new appointee subject to the National Assembly’s confirmation, and watched the markets vote with their money on the appointment. Then, give it a few weeks before announcing the suspension of the ex-appointee, and the appointment of an acting governor to serve out the remaining months of the ex-appointee. The announcement could also have been done on a Friday afternoon after the close of trading, allowing for damage control measures over the weekend.
Was I surprised at the reaction of the financial markets to the suspension of the governor of the apex bank? I wasn’t the least surprised. It was a confirmation of what we always knew about the lack of depth in the country’s financial markets. It was also a clear demonstration of the lack of understanding about how monetary policy processes work. Monetary policy process is now institutionalized, and the ex-appointee who chaired the monetary policy committee (MPC) by the virtue of his office, was one of the 12 members of the committee, and carried only one equal vote as other members. Of the 12 members, 5 are independents, 5 are members of the central bank (the governor, and 4 deputy governors), and 2 are members of the board of directors of the bank. The MPC is saddled with the responsibility of formulating monetary and credit policies within the bank. Without convening an emergency MPC meeting, the acting governor cannot unilaterally change the course of the existing policies, and the next MPC meeting is not due till March.
The exchange rate and equity market were quick to react to the news of the suspension, which in my opinion was a bit exaggerated. The exchange rate was always going to be a sticky issue in 2014 based on a confluence of headwinds such as the U.S quantitative easing tapering, reducing buffers to defend the currency, hedging against currency depreciation that has seen domiciliary account holdings spike, and re-emerging country risk due to the upcoming election. The rout in the equity market only highlights the role foreign portfolio investors now play in our markets.
Hopefully, useful lessons would have been learnt by both sides of the aisle. Personally, I have equally learnt some lessons. It has been reinforced that to call to equity, one must come with clean hands, and that if one is not God, or at least God’s anointed representative on earth with enough followership, and influence such that one can have the President kneel for special laying of hands and it becomes a national poster, then please do not kick against this government. And to our royal ex-appointee, whether your next ascent is to your royal throne or negotiated hospital bed in place of prison throne, I’ll sure be waiting for the sequel to this episode as I am certain you will only go down with your guns blazing.
By: Olugbenga A. Olufeagba