ICIR
THE suspended former Central Bank of Nigeria’s (CBN), Governor Godwin Emefiele, was the chief executive at Zenith Bank Plc before moving office to head the CBN in June 2014, a year before President Muhammadu Buhari became president of Nigeria.
Emefiele was reappointed for a second five-year term in May 2019, which was due to end in June 2024.
Roles and controversies under Buhari administration
The governor was one of the most influential members of the Buhari administration, during which the central bank made significant economic interventions, some of which were controversial.
These include propping up the naira, lending huge sums to the Federal government through Ways and Means (as a lender of last resort), extending credit to multiple sectors through the Anchor Borrowers Programme, and other ancillary interventions.
Analysts were, however, worried about some of his policies that gave undue attention to development finance and excessive regulation of banks at the expense of price stability.
Emefiele and violation of CBN Act, Fiscal Responsibly Act
The Central Bank of Nigeria (CBN) under Emefiele violated Section 38 of its own Act by overlending the sum of $49.2 billion to the Federal government through Ways and Means.
The situation subjected the economy to intense pressure as Nigeria’s inflation rate surged to 22.22 per cent.
Section 38(2)of the CBN Act 2007 provides that lending to the government should not exceed 5 per cent of the previous year’s actual revenue.
The ICIR findings further showed that with respect to revenue accruals, lending to the Federal government should not have exceeded $450 million but had spiked to $49.2 billion.
This development, among others, led to Moody’s downgrading of the Nigerian economy to B3 rating, driven by the significant deterioration in Nigeria’s government finances and overburdening debts.
An economist, Kelvin Emmanuel, told The ICIR that one implication of the development was that it put intense pressure on lending to small and medium enterprises.
“You notice that cash supply deposits are higher than the production outlook of the economy. When so much cash is chasing a few goods without commensurate production and services, it creates a problem.”
