President Bola Tinubu, in his recent trip to Paris, France, described Nigeria’s financial system under the suspended Governor of the Central Bank of Nigeria, Godwin Emefiele, as “rotten.”
He cited gargantuan difficulties in the flow of forex in and out of the country, saying that the difficulties enriched a few while impoverishing the vast majority of Nigerians.
“The financial system was rotten. Few people were making away with our money, that is over now; the man (Emefiele) is in the hands of the authorities,” he said.
President Tinubu’s comments come exactly two weeks after he suspended the former CBN chief to pave the way for investigations into the many anomalies that pervaded that bank under the tenure of Emefiele!
President Tinubu’s comments in Paris regarding the financial system under Emefiele reechoed statements by the then Emir of Kano, Muhammadu Sanusi II, in 2016 where he criticised selective forex allocations in Emefiele’s CBN. Sanusi, himself a former governor of Central Bank, lamented the practice whereby some Nigerian businessmen and political figures obtain dollars at official rates only to resell at a higher rate at the parallel market!
“We have created our own billionaires since 2015 from foreign exchange subsidy,” he said in a speech at the 15th Joint National Council on Development Planning meeting held in Kano. “They got the dollar at N197 and price their goods at N300,” he said in his speech titled “Nigeria: The search for new growth model.”
“For instance, when the CBN was selling dollar at N197 and people were buying at N300, if I sit down in my garden and pick up my phone, I would have enough people to call in the industry to get 10 million dollars at officials’ rate and sell at N300 and make a profit of over N1bn and if I do that four times in a year, for doing nothing I would have earned N4bn.
“And people were telling us that this policy was to help the poor. We should not devalue because if we do the poor people would suffer.
“…People that were profiting from this were the ones telling the government that if you devalue people would suffer; meanwhile they all got the dollar at N197 and price their goods at N300.
“The poor paid the price of the devalued currency and the rich schemed up the profits and it went on for one year and we talked and talked and talked. “If the present administration continues to behave the way the immediate past government behaved, we will end up where Jonathan ended. You may not like it but that is the truth.” He added that one need not be an economist to know that any system that allows someone to make N1bn profit through a phone call without investing a kobo is a wrong system and unsustainable. He pointed out that the economics aspect of the whole thing was that for every one billion dollars that was taken from the federation account and sold by the CBN at N197, the states were losing N100bn that could go into salaries, into agriculture and into healthcare. At the same time, he said, the states were going back to borrow from the same government on the bailout when the government was selling its dollars to a group of people. “What kind of economy are we running?”
I allowed this lengthy speech by the former Emir of Kano because the picture he painted exemplified the rot in the forex regime under Emefiele, a system he continued till his last day in office.
Anchor Borrowers Programme (ABP) is the brainchild of Emefiele. The broad objective of the ABP is to create economic linkages between smallholder farmers and processors with a view to increasing agricultural output and ensuring food price stability. But the practice was very far from the touted objectives. The loans were simply not given to farmers. Majority got to political figures and political influencers!
The specific objectives were simply negated by Emefiele who turned the Anchor Scheme to a political slush fund. The laudable objectives to increase and improve agricultural productivity by creating an ecosystem that drives value chain financing could therefore not be achieved.
Targeted beneficiaries supposedly smallholder farmers and medium to large scale farmers engaged in the production of agricultural commodities across the country never saw the loans. It was a mismanaged programme as the beneficiaries are mostly politically connected people and not farmers, which had resulted in loan repayment defaults.
In a recently released Selected Issues paper on Nigeria, the International Monetary Fund (IMF) said that only 24 per cent of loans under the Anchor Borrowers’ Programme (ABP) of the Central Bank of Nigeria had been repaid. IMF said the challenge of targeting the right recipients for credit had failed to make agricultural credit in Nigeria significantly boost production. “The weak effect of agricultural credit on production growth could be associated with difficulties in targeting the correct recipients. Part of the problem is that the incentive structure for repayment is weak, the recipient loans are not always well targeted and occasionally the funding is used for other purchases,” IMF said.
Interestingly, the All Farmers’ Association of Nigeria (AFAN) agreed with the IMF when, in December 2022, it said the CBN was having difficulties recovering the loans because most beneficiaries of the ABP were not Nigerian farmers.
In May 2022, to the shock of many Nigerians, three groups raised N100m each for Godwin Emefiele, to purchase the nomination forms to contest the 2023 Presidency under the platform of the All Progressives Congress. The groups are the Rice Farmers Association, Emefiele Support Group and Friends of Godwin. A source in the CBN close to him had reportedly told a newspaper that although Emefiele was aware that some groups were purchasing forms for him, he had yet to accept anyone. Despite the many denials, it was clear that Emefiele was warming up to contest for the office of President of Nigeria without resigning from his job as CBN governor. He did not resign, an action which put the Office of CBN Governor under disrepute. He indeed dragged that high national office into partisan politics. If his sins were to be ranked, this particular one will top the list.
Indeed, it became clear why both his forex regime and loan regimes favoured mostly the elite. He was using CBN resources to bribe and buy the elite to buy into his campaign for the office of president.
The naira redesign programme was another sin and an undeserved punishment that Emefiele committed against the Nigerian people. The policy was so poorly executed that Nigerians were dying in hospitals because they could not access their cash in banks to pay for hospital bills and the hospitals were not ready to treat without receiving the cash.
Not only that the new naira notes that he claimed he printed with billions of naira were not available in commercial banks, the scarcity of cash led to the collapse of online banking platforms as practically all transactions shifted there. It dawned on Nigerians the CBN had no contingency plans in place. The economy shrunk by more than 10% with millions of manhours wasted as millions of Nigerians thronged the banks daily in search of money. Indeed, it was a war situation!
Many people lost their lives and very many businesses shut down. It was one of the shoddiest currency redesign implementations in the world and it came with a great cost in lives and businesses. Most of those businesses have never recovered.
Emefiele also failed to manage Nigeria’s inflation. He inherited a single digit inflation rate and by the time he was suspended the country had a double-digit inflation rate. When Emefiele came on board in 2014, the Naira issued by the Central Bank of Nigeria (CBN) and in economic circulation, was less than one and half trillion naira. In fact, in December 2015, just about a year into Emefiele’s governorship of the CBN, the Naira in circulation was N1.46 trillion.
Seven years later, in September 2022, this amount more than doubled to N3.23trn. To worsen the situation, N2.73trn of the N3.23trn in circulation was outside the banking system. 84.52 percent of the supplied money was not under his control. It was during the enforcement of the new naira redesign and cashless policy that we were told that one of the aims was to mop up this N2.73trn outside the control of the banking system. By then a lot of harm had been done to the economy.
Emefiele’s conduct at CBN can be correctly described as “economic sabotage” of the nation. Not only did he skewer the monetary policy, he ensured multiple forex rates, he gave loans meant for farms to non-farmers, he impoverished Nigerians through his utterly scandalous currency redesign, a redesign which saw states sue the federal government.
Indeed, Emefiele committed many sins against the Nigerian economy. He should therefore be brought to book, he and his collaborators and co-conspirators.
MAY NIGERIA REBOUND
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