Emefiele’s strange policies that brought him down

Life they say is full of surprises and fate twists as long as a person lives. The story of the embattled former Governor of the Central Bank of Nigeria, Godwin Emefiele, is not farfetched from the foregoing.

Having risen to prominence through an almost miraculous means, he became a mighty force to contend with in Nigeria’s financial landscape. Feared and revered at the same time, Emefiele’s economic policies were ones to be wary of in Africa’s largest economy.

Today, the all-powerful financial emperor lies at the mercy of the Federal Government and the many toes he had stepped on as the former CBN governor, especially the incumbent President of the Federal Republic of Nigeria, Bola Tinubu.

Appointed in 2014 by the then President, Goodluck Jonathan after the controversial ouster of Sanusi Lamido as head of Nigeria’s apex bank, Godwin Emefiele was anointed the right captain to stir the ship of the CBN.

The anointed Emefiele had barely spent one year in his leadership of the CBN when his principal, Jonathan lost his re-election into office as Nigeria’s president. The oil of his anointing must have been so sacred that he was retained as the Governor of Nigeria’s apex bank by former President Muhammadu Buhari, who took over from Jonathan.

He became the longest-serving governor of the CBN after his tenure was renewed by former President. While at the helm of the CBN affairs, Emefiele operated several policies that almost crumbled the country’s economy. In 2015, as Nigeria’s foreign exchange reserves fell by about $5,183,866,731, a situation that closed the year at a 10-year low, Emefiele’s CBN placed foreign exchange restrictions on 43 items like margarine, rice, cement, and private jets.

The CBN claimed that the essence of the restriction was to improve and support local production of these commodities, but it also deprived importers of those commodities access to foreign exchange.

Not long after this self-celebrated feat, the CBN’s policy witnessed stiff economic resistance as black market vendors began to multiply exchange rates, a situation that has been blamed for the weakening of Africa’s largest economy’s currency; the demand for dollars increased at the black market and the naira weakened.

To address the fall of the naira, Emefiele went further to take some unconventional steps. One of them was the reported use of the Department of State Services operatives to monitor the Bureau de Change operators who sold more than the CBN’s pegged N400/$ or bought at more than N390/$. He was also reported to have ordered the cutting of trees where black market vendors worked in the Federal Capital.

In 2021, it was reported that the “CBN under Emefiele issued a circular restricting banks and other financial houses from operating accounts for cryptocurrency service providers, given the money laundering and terrorism financing risks posed by cryptocurrency. The apex bank went further to ban a website that reported the value of the dollar in the black market among other stringent measures.

Poverty, rising inflation

Under his reign as CBN Governor, Nigeria’s inflation kept rising yearly (8.05 percent in 2014 through 9.01 in 2015, and eventually 18.85 percent in 2022 and an all-time high of 27.33 percent in October 2023, according to the National Bureau of Statistics report) and with the naira losing its value.

The NBS data showed that Nigeria became poorer under its financial rule. The NBS reported that some 133 million (about 63%) Nigerians were multidimensionally poor. This meant that the poverty was not just in monetary terms but less access to other basic amenities.

Although factors like the COVID-19 pandemic, and the Russia-Ukraine war cannot be exonerated from being culprits in Nigeria’s economic misfortune, Dr Moses Ogah, a former banker and economist at Joseph Sarwuan Tarka University Markurdi, told Saturday PUNCH that the direction of the monetary policies from the central bank also led inflation to rise from a single digit the governor met it in 2014 to double digits currently experienced in the country.

“As Professor Kingsley Moghalu said, ‘He is, without debate the worst and most damaging Central Bank Governor in Nigeria’s history.’ Under his watch, Nigeria’s inflation rose to hyperinflation; from a single digit of eight per cent to an all-time high of about 28 per cent. That is why we are where we are today in the country. The policies are killing us economically. Food inflation which concerns the average Nigerian has risen to about 31 per cent making it more difficult for the indigent to survive,” Ogah noted.

CBN’s law violated

The CBN’s loans to the government otherwise known as ‘Ways and Means’ jumped from N790bn in May 2015 to N23.8tn in 2022 ($49bn). The Ways and Means Advance clause of the CBN Act Section 38(2) & (3) can be activated if the government suffers a revenue shortfall but should not be more than five per cent of the government’s previous year’s budget. The failure to adhere to this rule attracted heavy criticism from different quarters.

A careful observation of the loan given to the government under the Emefiele administration showed a disparity from the amount permissible. This has been blamed for Nigeria’s increasing inflation. Emefiele was reported to have justified the continuous borrowing, saying, “The CBN is a banker to the government and also a lender of last resort to the government, hence it is responsible for helping the government in times of need.

Ogah said the CBN’s loan to the government under the Way and Means by the suspended governor was political and a breach of its (CBN) constitution. “The CBN is supposed to be a regulator of financial institutions in the country while also ensuring economic stability through the formulation of macro-economic and fiscal policies. He went too far to violate the CBN Act in order to please his paymasters,” Ogah added.

The Senate approved the upward review of the Ways and Means loan accessible by the government from five to 15 per cent at the end of President Buhari’s administration. Also, the Senate approved the request of former President Buhari to restructure the N22.7tn loan from the CBN under the Ways and Means provision.

Partisan despite the law

Beyond his monetary policies, that sank Nigeria’s economy for almost seven years, Emefiele became famous for his political involvement, especially in the run-up to the 2023 general elections. The now humbled Emefiele violated Nigeria’s Constitution which states that “a Central Bank governor, to protect the independence of the Central Bank, cannot participate in partisan politics, when he attempts to vie for the presidency in May 2022.

Ahead of the 2023 presidential poll, he approached a court where he sought an order that would permit him to run against Bola Tinubu, Vice-President Yemi Osinbajo, and several other notable politicians for the presidency without resigning.

“He thought he had done enough for the cabal around Buhari and wanted to be rewarded with the president’s seat. He got the support of the cabals to contest in the primary elections and that made him more interested in politics. When it was obvious that he would not win the race against Bola Tinubu, he decided to support another candidate who also lost the election,” Isah Omata an APC party faithful and political analyst told Saturday PUNCH.

CBN policy summersault 

In October 2022, the CBN rolled out new monetary policies, including a naira redesign, limits on cash withdrawals, and the introduction of a cashless economy. The apex bank argued that the policy aimed to deal with the circulation of fake naira notes and discourage vote-buying, terrorism financing, and cash hoarding among others, a move expert says has debased Nigeria’s economy.

The naira redesign was resisted by the former Minister of Finance, Budget and National Planning, Zainab Ahmed, who claimed that her ministry was not aware of the monetary policy.