Emefiele: A steady hand calming the monetary waters (2)

Though the fundamentals of the problems have persisted one year down the line, Godwin Emefiele has shown good leadership by the very bold and proactive steps that he has taken to keep the negative effects of the economic crisis at the best possible minimum level. That is why in spite of the fact that revenues have fallen by over 60 percent, the naira has only depreciated in value by 15 percent relative to the dollar, a great achievement by any standards given the exigent circumstances and the inflation rate has also been smartly managed and remains within the single-digit bracket.

Emefiele’s actions and pronouncements have also sent clear signals that portray him as firm and decisive in dealing with financial infractions. For instance, the CBN fined GTBank, Zenith, FCMB, Access Bank and Sterling Bank over N312m for contravening the Banks and Other Financial Institutions Act. He has also made it clear to bank executives that the apex bank will not hesitate to suspend the dealership licenses of banks found to be engaging in foreign exchange malpractices as well as infractions and declared a zero-tolerance policy on fraudulent borrowers. The recent sack and handover of CBN staff found to be involved in the N8bn currency scam also illustrates his vigilance and knack for maintaining institutional discipline. It is therefore not surprising that the CBN today, as an institution, commands stronger respect from government and industry stakeholders as an independent institution that does not only understand fully, the extent of its roles and functions, but is also willing and quick to exercise it without fear nor favour.

Beyond fiscal monetary management, Godwin Emefiele, in response to the serious challenges confronting the economy, has also taken steps to expand the role of CBN beyond its traditional role so that it can play a greater role as an institutional agent of development. He has shown uncommon bravery in challenging certain orthodoxies of fiscal management and sees his mandate as a holistic one which is beyond managing inflation, exchange rate to include taking fundamental steps that can influence those indices.

To this end, he has perhaps placed a greater emphasis on development financing of strategic growth stimulating sectors of the economy like infrastructure, agriculture, manufacturing, etc as a strategy for achieving sustainable improvement of the indices which support national economic development. This vision of CBN as an institution which is not just a mere monetary regulatory institution but an active agent working to improve the fundamentals of the economy in order to directly impact the lives of Nigerians is the defining focus of the Emefiele era. In his quiet but effective way, he is determined, working with the fiscal authorities and other key players in the country’s financial sector, to deal with the root causes of the challenges facing the economy and not just the symptoms. In other words, monetary policy should not stop at stemming the tide of inflation through inflation-targeting and managing exchange rates.

As has been established by development experts, a narrow monetary policy focus cannot guarantee economic growth – low inflation does not necessarily lead to higher income and a stable economy. By making employment generation and development of critical infrastructure a key plank of the CBN’s focus, Emefiele is adopting an approach taken by other emerging economies to very high levels of degrees of success.

To give vent to this new vision of CBN as an agent of development, the CBN governor has within this first year, launched the N220 billion Micro Small Medium Enterprises (MSMEs) fund and invested about N500 billion in the Development Bank of Nigeria (DBN). These two pilot initiatives both have the essential capacity to frontally and sustainably attack the problem of access to finance that has dogged small businesses – who are the engines of economic growth – by providing long-term loans at far cheaper rates to small businesses. Of course, this will greatly ignite strong growth in these sectors by increasing economic productive capacity, creating jobs and strengthening the fundamentals of the macro-economic sub-structure.

With this posture, the CBN governor has within this first year effectively distinguished himself as a CBN governor who in addition to effectively discharging the traditional role of a central bank has also extended its functions to include stimulating fundamental development of key sectors with a view to addressing the root causes of macroeconomic instability. That is why he deserves to be called Mr. Development.

Paul K. Adegboyega