The re-appointment of the governor, Central Bank of Nigeria (CBN), Godwin Emefiele for another five years tenure by President Muhammadu Buhari is a vote of confidence on Emefiele and the policies and drive of CBN towards redefining and creating balance and resilience in the economy for sustainable growth and development. His re-appointment has been commended by a spectrum of experts. Also for this writer as an economy and business journalist who has keenly monitored CBN policies over the years, the re-appointment is deserved.
In an article entitled, “CBN and the economy, going forward”, written prior to his re-appointment and published in ‘The Government and Business Journal’(20/03/19) and Leadership newspaper (23/03/19), I wrote that, “considering the characteristics of the Nigerian economy which had made it to be resistant to guidance and discipline, and remained factor-driven for 58 years, the Central Bank of Nigeria deserves commendation for evolving and implementing policies that tend towards reinventing the structure of the economy to improve local production, expand the country’s industrial base and create more employment; a development that needs to be sustained going forward.”
Furthermore, I remarked that Emefiele is noted as the “most challenged” and “hardest working” CBN governor in recent years in view of the crisis occasioned by the recession and the dexterity he deployed with his team which contributed largely to pull the economy out of the maze. The forex market crisis especially put Emefiele on the spot and his critics shot “fiery darts” at him and called for his removal.
In the crisis, the apex bank established creative policies including the Importers’ and Exporters’(I&E) FX Window- the trump card that created a magical impact in the forex market. The I&E FX window triggered an inflow of forex which helped to kick-start local production which hitherto was comatose, with an increase in the overall net inflow of forex into the economy in 2017 increased to $57.32billion against $37.19billion in 2016. Concluding the article, I noted that, “going forward, the momentum created by CBN should be sustained even as some commentators have advocated for tenure extension for Emefiele to further drive the policies for a maximum impact.”
In re-appointing Emefiele, President Buhari allowed statesmanship and genuine recognition and objective performance evaluation to rise above political considerations especially as Emefiele was first appointed by former President Jonathan. President Buhari recognized the need to sustain the momentum for the greater benefit of the economy.
Emefiele has demonstrated a good understanding of the art of central banking vis-à-vis the Nigerian economy. With patriotic zeal, he has worked towards redefining and repositioning the economy through a combination of monetary policies and development finance options. He understood that central banks in developing countries play a wider role and perform both traditional and non-traditional roles.
According to experts, central banks in developing countries perform developmental and promotional activities especially because developing countries do not have vibrant money and capital markets. Vibrant capital markets help to improve the monetary transmission mechanism, increase public and private access to long-term finance and widen participation in the economy. It promotes inclusive financing and engenders inclusive growth which is what CBN’s development finance initiatives aim to achieve.
President Buhari and Emefiele seem to be on the same page on the way forward for the economy. Both are desirous to free the economy from the stranglehold of unbridled importation which depletes external reserves unnecessarily and imports unemployment to the economy. In a press report, Emefiele said that, “when the President came on board, he came at a time when the global crisis was setting in and I had a conversation with him, when I said our reserves are going to plummet, and we came up with an idea that we produce the items we were importing that can be produced in Nigeria.”
The idea led to the exclusion of 41 items from the interbank foreign exchange market to conserve reserves, a policy which evidently resonated with the president. The excluded items include toothpicks, tomato paste, sugar and other such items which can readily be produced locally. It was noted that the import bill for toothpick was $18million per annum and $400million for tomato paste. The importation of these items do not only deplete external reserves but also transfers wealth to other nations and import unemployment to Nigeria.
Another CBN policy that resonated with President Buhari is the Anchor Borrowers Programme (ABP) which the president launched in 2015 with the objectives to link anchor companies involved in the processing and small holder farmers(SHFs) of the required key agricultural commodities such as rice, maize, wheat, sugar cane, oil palm, cocoa etc and conserve external reserves by reducing agricultural commodity importation, increase banks financing to the agricultural sector and create new generation of farmers/entrepreneurs and employment.
Other objectives are, to reduce the level of poverty among small holder farmers, assist rural small farmers to grow from subsistence to commercial production level and increase capacity utilization of agricultural firms and deepen the cashless policy and financial inclusion among others.
The importance of agriculture cannot be overemphasized. It is the back bone and starting chain of the economy. Over the years, CBN has been promoting agriculture, but took it to greater heights with the ABP under Emefiele’s leadership. It scaled up the amount to be disbursed under the Commercial Agriculture Credit Scheme (CACS) with 60 percent of the CACAS targeted at the identified commodities even as the loan limit also was increased to N50 million.
As noted by The Vice National President, All Farmers Association of Nigeria (AFAN), Chief Daniel Okafor quotes, “CBN has been agriculture friendly since Emefiele’s tenure”. If CBN sustains the momentum of ABP and other such initiatives, the economy is likely to experience the agriculture miracle which has transformed other developing economies.
Going forward, all hands need to be on deck. Both the fiscal and monetary authorities need to evolve more creative policies to drive the economy. CBN should sustain the momentum of existing policies towards improving local production, expanding the country’s industrial base and creating more employment. The economy needs further stabilization through diversification, greater energetic inflows and transformational activities. Creating multiple economic pillars, boosting the supply-side productive potential and increasing aggregate demand towards achieving double-digit growth is the way to go.
–Nwobu is a business journalist and chartered stockbroker