Once again, Mr Godwin Ifeanyichukwu Emefiele, governor of the Central Bank of Nigeria, is in the news. Central bankers the world over have dominated newspaper headlines as they have sought to tighten monetary conditions to stave off rising prices in their respective economies. As domestic inflation rises relentlessly, Mr Emefiele, a late comer to the idea of combating inflation with increases in the central bank’s benchmark rates has embraced tighter monetary conditions with gusto, seemingly abandoning his previous commitment to unorthodox policy measures.
He is, however, in the headlines for different reasons. Nothing is conventional about domestic security agencies applying to the courts for the arrest of a serving central bank governor for charges, including amongst others, financing terrorism. That the court would not oblige the application, and that there have been subsequent demonstrations arguing the action of the state security services as part of a plot by vested interests to frustrate the Central Bank governor’s policy are tangential to this conversation. At the very least, the Central Bank has reversed itself on the matter of cash withdrawal limits that it recently hinged on its currency redesign scheme. Beyond this, there is increasingly strong evidence that the period assigned for swapping the new naira notes for the old one might be too short to effect an orderly transition.
There are a few local studies around this issue, but anecdotal evidence suggests that currency swaps constrain demand. A disorderly one will do even more. Given that consumer spending accounts for about two-thirds of domestic output – by the expenditure measure – one can only imagine the damage to the domestic economy from fouling things up.
Unfortunately, whether it was his intention to run for office of president of the Federal Republic (as a card-carrying member of one of our political parties) a few months back, or his decision to convert large portions of the Federal Government’s deficit into cash provided by the Central Bank, Mr Emefiele’s tenure as Central Bank governor has been an unusual one. The economy continues to hurt from his policies. Domestic inflation is a direct consequence of the nearly $48 billion that the Central Bank under his watch has lent to the Federal Government. Output numbers for the manufacturing sector shrank in the September quarter. While this promises to worsen the blight that unemployment is to the domestic economy, it is easy to trace the difficulties domestic businesses are having to the Central Bank’s multi-window foreign exchange policies.
PREMIUM TIMES, concerned that Mr Emefiele’s partisan politicking was inconsistent with his sundry obligations to the nation as Central Bank governor, had earlier invited him to resign. There were, and remains, stronger reasons for his sack. The conversion of parts of the Federal Government’s deficit into cash provided by the Central Bank is clearly in breach of the Central Bank’s enabling statute. However, we understand that a Federal Government that is itself complicit in this violation of the law lacks the moral authority to proceed against a rule-breaking Central Bank governor.
However, in his eight years in office, Mr Godwin Ifeanyichukwu Emefiele has heaped more opprobrium on the office of governor of the Central Bank of Nigeria than have all the governors the country has had since 1959 put together. Need we add that the markets’ trust in the person, authority and competence of the Central Bank governor are a non-negotiable requirement for success in that office?
Mr Emefiele is clearly past his “best before date” as governor of the Central Bank of Nigeria. The Buhari government lacks the will to do anything about it. Alas, Mr Emefiele is not too self-aware either, and so may not heed calls to act in the cause of the greater good. Still, in the interest of Nigeria and its long-suffering people, we are constrained once again to call for his resignation. The best time to have done this was soon after he tried unsuccessfully to run for elective office. The next best time is now, when rumour is being bruited about that he is a fugitive from justice.
His resignation, though, will fix only the initial requirement for fixing the country’s monetary policy space. The antecedents of the Buhari administration suggest that it will interpret a vacancy in one of the nation’s higher offices as an excuse to put another crony in office, especially one that may extend his capture of monetary conditions under a future administration. This has been the President’s preferred method of running the country. And we agree completely with him that his best in this regard has not been good enough for Nigeria.
