I laughed hard this week when I saw how Nigerians and especially the political elite react vehemently to the CBN’s governor’s purchase of the nomination form of the All Progressives Congress (APC) to contest the 2023 presidential election and his approach of the courts to permit him to contest without resigning.
All of a sudden, Nigerians and the political elite knew Emefiele’s actions were breaches of the laws that established the central bank and guaranteed its independence. More hilarious is the claim that Emefiele’s actions would send negative signals to the international and investment communities about Nigeria’s commitment to upholding its own laws with regard to the strict independence and non-partisanship of the apex bank.
In simple English, what the CBN has been doing is illegally printing money for the government and mopping up the money in supply to control inflation
Even more hilarious was the decision of the Nigerian House of Representatives to reconvene for an emergency plenary session to deliberate on the presidential ambition of the apex bank governor.
My only question is; when did they realise that Emefiele is bastardising the office of the CBN governor? Did they just realise it now that he’s threatening to takeover power altogether? Or had they been aware all along, but kept quiet since he was basically printing free money for the political class?
Nigeria claims to have a constitution and laws governing the country. But like I have always argued, the constitution and laws are only on paper and mean nothing to the Nigerian politician.
In reality, the only true law that applies is the one that governs elite competition and contestation for power. Every other law is expendable and of no consequences when it clashes with the interest(s) of the elite and their quest for power.
For the better part of seven years, Emefiele has been alleged to be a rogue central bank governor, violating all ethics, norms and procedures to satisfy his political masters and build an amazing goodwill among politicians.
Indeed, he made history by becoming the first and only governor of the central bank to be nominated and confirmed for the second term of five years since the return to democratic rule in 1999. At his second confirmation hearing in 2019, he was confirmed unanimously with the Senate saying he has “performed creditably well in his first tenure…”
But a quick glance at his actions in the first term shows a CBN governor that virtually turned the central bank into the government’s piggy bank in contravention of the laws setting up the bank.
For instance, both the CBN Act of 2007 and the Economic Community of West African States (ECOWAS) norm for financing government budget deficits by the central bank capped any such advance at 5 percent of revenue.
Section 38 (2) of the CBN Act specifically stated that: “The total amount of such advances outstanding shall not at any time exceed five percent of the previous year’s actual revenue of the Federal Government.”
Doyin Salami, an erstwhile member of the Monetary Policy Committee (MPC) of the CBN and now Chief Economic Adviser to the president, raised the alarm in July 2017 about the illegal funding of the government by the apex bank, accusing the bank of providing a “piggy-bank” service to the Federal Government and in trying to control the ensuing inflation, the CBN raised the cash reserve ratio (CRR) – effectively reducing the money in circulation and crowding out the private sector in favour of the government.
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As of 2018, CBN’s claim on the Federal Government (consisting of overdrafts, treasury bills, converted bonds and other such lendings) surged as high as 780 percent from N922 billion in 2014, according to data obtained from the CBN‘s statistical bulletin, to a whopping N8.12 trillion in 2018, 22 or 23 times over the limit, which going by government revenues in 2018, should be about N350 billion. In simple English, what the CBN has been doing is illegally printing money for the government and mopping up the money in supply to control inflation.
This is not to even talk about the so-called anchor borrower’s scheme loans that were basically free money dolled out to some interests/political groups with absolutely no way of collecting it back, the deliberate forex arbitrage bazaar that Emefiele has been running at the CBN since 2015 – and using it to reward close associates and family members of the president, the various policy somersaults with regards to foreign exchange and cash reserve ratios, and its veering into dubious development banking.
We have been shouting about this illegality and the destruction of Nigeria’s economic fundamentals and monetary policy for years but were ignored. The politicians all looked the other way and hailed him because he was funding the government and them. They had no reason to go against him. In fact, he has continued printing money for the government after his confirmation in 2019 such that the CBN’s claim on the government is now at a record N15.511 trillion in August 2021.
So, if the politicians tolerated, condoned and celebrated Emefiele’s illegalities, then, why are they shouting now? Or is it because he is now threatening to take over power altogether instead of just financing those in power?
