• Thursday, March 28, 2024
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Analysts set agenda as Buhari nominates Emefiele for 2nd term

Emefiele

As Godwin Emefiele, governor of the Central Bank of Nigeria (CBN), prepares for the herculean tasks at the helm of the apex bank for a second five-year term, Nigerians expect him to focus on policies that will drive lasting growth across various sectors of the economy.
President Muhammadu Buhari on Thursday asked the Senate to confirm the reappointment of Emefiele as governor of the CBN.

In a letter addressed to Senate President Bukola Saraki, which he read at Thursday plenary, President Buhari said the appointment is for a second and final term of five years.
The Senate is expected to confirm Emefiele’s appointment, National Assembly sources tell BusinessDay.

“The second term gives him (Emefiele) an opportunity to achieve the long-expected full convergence of the FX market. Foreign investors would want to see that happen. It will further help to stimulate foreign direct investment (FDI),” an investment analyst with one of Nigeria’s tier-1 lenders told BusinessDay on phone.

The source whose major role in the Nigerian bank is to relate with both foreign and local investors simply said, “Having different FX windows sends a wrong signal to investors who are eyeing Nigeria’s market. It was quite essential when it was introduced but the approach has overstayed its purpose. The fragmentation in the FX space needs to go. We expect to see a lot more convergence.”

He also expects Emefiele to be a lot more flexible in allowing banks trade Naira to lessen the pressure on FX. This gives the Naira a lot more liquidity.”

He believes that for more credits to private sector to happen, “CBN should look into the current Cash Reserve Ratio (CRR) regime. It is against what is obtainable globally. CBN’s development fund should be adequately coordinated through the banks to achieve the real growth and transparency needed. CBN needs to ensure that payment service banks are adequately providing the needed services to deepen the services for the unbanked customers.”
Emefiele was first appointed as Governor of the apex bank on June 3, 2014 by former President Goodluck Jonathan.

Ayodele Akinwunmi, head of Research FSDH Merchant Bank said, “Good development for the financial market and economy. It will help the economy to consolidate the gains recorded under the Governor’s administration in the last five years. It will also ensure the continuity of the current monetary policy stance and its attendant benefits on the economy.”

Taiwo Oyedele, head, Tax and Regulatory Services, PWC, said Emefiele is a safe pair of hands and the market knows what to expect from him, so his appointment is good for stability and market confidence.

“Hopefully he can leverage on his experience over the past 5 years to ensure more vibrant pro-growth monetary policies,” Oyedele said.

Gbolahan Ologunro believes that the reappointment of the CBN Governor brings stability as this will end the uncertainty around macro-economic policies particularly around the exchange rate and the multiple exchange window.

“We foresee a situation where the CBN will continue in its intervention policies to ensure FX stability,” he said.

According to Gbolahan, the current equities market needs more than a CBN Governor, noting that this may not really halt the bearish run in the equities market as investors would want to see bold policy statement from the Government on how they intend to stimulate growth.

Abimbola Omotola, Analyst at Chapel Hill said the reappointment implies the continuation of CBN monetary policy objectives and plans over a couple of years noting that the apex bank under his watch has demonstrated a great bias for FX stability and that will continue.

“Monetary policy environment will remain largely tight, evident in the volume of outstanding OMO bills that has increased from N3.5trillion to N13.5trillion,” he said.

According to Abimbola, the CBN under Emefiele’s watch has been development focused with interventionist policies in various sectors such as Anchor Borrower Scheme in the Agriculture space and also in the power sector which may likely continue.

“The CBN under Emefiele has done much more than is required of them,” he added.

In his view, Andrew Nevin, Advisory Partner, and Chief Economist, PwC said Nigerians often have unrealistic expectations of what the CBN and Monetary Policy can achieve.

According to him, many of the country’s economic challenges can only be addressed with structural reforms that are outside the mandate of the CBN, and Nigerians should not look to the CBN to solve all economic issues,” he said in an email response to BusinessDay.

Titled: ‘Renewal of the appointment of Godwin Emefiele as Governor of the Central Bank of Nigeria,’ President Buhari’s letter reads: “In view of his expiration of the first tenure of the current Governor of the Central Bank of Nigeria (CBN) on June 2, 2019, and in pursuant to the provisions of Section 81 (2) of the Central Bank of Nigeria 2007, I hereby present for confirmation by the Senate, Mr Godwin Emefiele for reappointment as Governor of the Central Bank of Nigeria (CBN) for a final term of five years.

“It is my hope that this distinguished Senate will consider and confirm the nominee in the usual expeditious manner”.

A stockbroker wants Emefiele to see his second term as another chance to improve on his engagement with capital market stakeholders, adding that he should avoid policies that have negative rub-off on the capital market.

“We have before now argued that his (Emefiele’s) policies are akin to giving preference to the Money Market than the Capital Market”, he added.

“Emefiele should ensure that the interest of Capital Market comes to fore in his policies. Currently, when you look at what happens at the equities market, there is a kind of disconnect between Money Market and Capital Market. The current trend shows higher interest in the Fixed Income (FI) market at the expense of the equity market.”

Benedict Obhiosa, executive secretary of the Manufacturers Association of Nigeria (MAN), wants Emefiele to ensure that exporters have unfettered access to their proceeds while working on making sure that companies are able to freely access CBN funds domiciled in deposit money banks.

“There are encumbrances to accessing  funds such as the CBN’s N220 billion. He needs to ensure that banks comply with the directive of ensure easy access to such single-digit funds,” he said.

Vincent Nwani, investment analyst and  former director at Lagos Chamber of Commerce and Industry, wants the CBN to work on the FX and reduce multiple exchange rates in the economy to encourage foreign remittances.

“He needs to ease the monetary policy and ensure that SMEs are able to walk into banks and access funds. This should start by cutting the monetary policy rate further down,” he said.
“Let’s ensur that Diaspora remittances are taken at the right rates,” he added.

Polaris Bank Managing Director/CEO, Tokunbo Abiru said the re-appointment of the CBN Governor for another term of five years is a positive development for the economy.

“The economic outlook remains positive, as this adds fillip to the continuity of current macro – economic policies initiated by the CBN Governor, Godwin  Emefiele. The positive interventions in the Agriculture, Real sector and foreign exchange stability gives confidence that the economy will continue to grow,” Abiru told Businessday.

 Iheanyi Nwachukwu, Hope-Moses Ashike, & OLUFIKAYO OWOEYE