By Solomon Semaka.
Obviously, in the last six years, the Central Bank of Nigeria – CBN, under the effective watch of an eminent banker, Mr Godwin Emefiele since assuming office on June 3, 2014 as the eleventh Governor of the financial regulatory institution, has played a crucial and central role in the development and expansion of the economy in addition to its traditional functions of formulating monetary policies and ensuring financial systems’ stability in the country.
Evidently, the CBN has always played dominant roles in upholding and driving the stabilization of the economy through monetary policies, but it is glaring that the Bank has become more vibrant, proactive, and innovative under the leadership of the present Governor, Mr Godwin Emefiele. His patriotic zeal, energetic burst and innovative capability is leading the country’s apex financial institution is worthy of commendation.
Unveiling his vision for the CBN at his maiden world press conference, on June 5, 2014, Emefiele, in a 10-point agenda, passionately shared his ideas on creating a Central Bank that is professional, apolitical, and people-focused. He expressed desire to lead, in his words, “A Central Bank that spends its energies on building a resilient financial system that can serve the growth and development needs of our beloved country, Nigeria.” It is pertinent to note his leadership has been on course effectively implementing the mandate of appointment.
Given his pedigree, Emefiele was expected to bring on board novelties at the Bank and he wasted no time in doing so. While building on the policies of his predecessors, the core of Emefiele’s innovative stance at the CBN was development financing. To him, the CBN was to act as financial catalyst by targeting strategic sectors that could create jobs on a mass scale and reduce the country’s import bills. He declared that the CBN would deploy developmental initiatives to create an enabling environment with appropriate incentives to empower innovative entrepreneurs to drive growth and development. It is gratifying to note that this has already achieved most of these through effective collaboration in leadership.
It is instructive to place on record that when Godwin Emefiele assumed office as Governor of the CBN, Nigeria faced a series of challenges and spillover effects from the global economy melt down. However, with dexterity and a team of committed staff at the Bank, the CBN has been able to steady the economy with people-centered policies. Serving as Chairman, Board of Directors of the apex bank, whatever Emefiele has achieve at the CBN is in effective leadership collaboration with Deputy Governors at the CBN who are also board members that have always brought their valuable wealth of experience to bear on policy formulation and reforms.
Mrs. Aisha N. Ahmad serves as the Deputy Governor, Financial Systems Stability Directorate; Mr. Edward L. Adamu is the Deputy Governor, Corporate Services Directorate, while Mr. Folashodun Adebisi Shonubi is the Deputy Governor, Operations Directorate and Dr. Kingsley Obioram, Deputy Governor, Economic Policy Directorate. This team of dedicated and consummate bankers have effectively synergized with the Godwin Emefiele leadership to place the CBN in vantage position of stabilizing the country’s economy through meaningful policies and reforms that has continued to add value to the financial sector.
Through its various policy thrusts, the apex bank has continued to impact on agriculture using the instrumentality of the Anchor Borrowers’ Programme and creating huge number of jobs and reducing the nation’s food import bill. Also adopting other intervention policies, agro- industry and agro-processing activities have enabled Nigerian farmers to add value to the commodities they produce thereby eliminating the country’s perception as a net exporter of agro-products.
CBN under his effective and collaborative leadership has become a repository of innovative ideas and dynamism as the bank confronts some of the toughest challenges witnessed in the Nigerian economy. Emefiele adopted the neo-liberal approach to the art of central banking having recognised the global change in the theory and practice of central banking.
According to experts, “the neo-liberal approach is idiosyncratic and dramatically different from the historically dominant theory and practice of central banking, not only in the developing world, but notably, in the now developed countries themselves.”
Central banks in developing countries frame their monetary and credit policies in such a way that larger and desired quantities of bank credit go to priority sectors such as agriculture, cooperatives, small industries and export trade. They adopt the policy of controlled expansion of bank credit, to undertake direct financing of development projects by lending liberally to those institutions which provide development finance. This is exactly what the Emifiele led leadership of the CBN has achieved over these years of been in the saddle as Governor working with a team of dedicated and supportive lieutenants.
With the milestones achieved by his credible and effective shared leadership, it was no surprise that an impressed President Muhammadu Buhari reappointed Godwin Emefiele for a second term in office as Governor of the Central Bank of Nigeria (CBN), the first time anyone has ever been so reappointed since 1999. Equally impressed by the effort of the CBN under his leadership, the Senate, without any opposing voice, again confirmed Emefiele’s appointment.
The CBN-initiated Anchor Borrowers’ Programme (ABP) launched by President Muhammadu Buhari in November 2015 has triggered a revolution in the value chains of selected crops, especially rice. This novel development finance intervention scheme ensured that Nigeria emerged from being a net importer of rice to becoming a major producer of rice, supplying key markets in neighbouring countries. Statistics reveal that a total number of over one million farmers cultivating over a million hectares, across sixteen different commodities in the country’s 36 States, have so far benefited from the programme, which has also generated over three million direct and indirect jobs across agricultural value chains as at end 2019.
In a bold move to contain rising inflation and to cushion the impact of the drop in the supply of foreign exchange to the Nigerian economy, the Emefiele led Board of Governors of CBN adopted unconventional monetary policies that he himself described “extraordinary measures needed to tackle extraordinary challenges.”
Not only did the CBN tighten monetary policy rates over a period, the Bank introduced demand management approaches to conserve Nigeria’s reserves and support domestic production of certain goods. In a bid to encourage local manufacturers to consider local options in sourcing their raw materials, the CBN, under Emefiele, restricted access to foreign exchange on 41 items (now increased to 43). Four of these items alone, at the time, constituted over N1trillion of Nigeria’s annual import bill.
Although vilified for many of its decisions, the CBN has always insisted that the Bank’s decisions were and will always be in the overall interest of Nigerians. Hence, it embarked on other policies such as the Youth Entrepreneurship Development Programme (YEDP), Accelerated Agricultural Development Scheme (AADS), the Agri-business/Small and Medium Enterprises Investment Scheme (AGSMEIS), the National Collateral Registry (NCR) and lately the Creative Industry Financing Initiative (CIFI), which is a collaboration between the CBN and the Bankers’ Committee.
CBN under the current leadership has been ‘fighting’ aggressively on virtually all fronts to reposition and restore stability and dignity of the Nigerian economy. The gains were becoming obvious before the COVID-19 pandemic which inflicted huge damages in the global economy and triggered a shift from multilateralism to individualism. Countries started fighting just for themselves and adopted stringent export restrictions on food and critical medical supplies and drugs.
According to the CBN governor, Nigeria should “be fully transformed into a modern, sophisticated and inclusive economy that is sufficient, rewards hard work, protects the poor and vulnerable, and can compete internationally across a range of strategic sectors.” Prior to COVID-19, CBN had evolved policy measures aimed at achieving self-sufficiency in some 43 items by restricting access to Forex for the importation of those items. The bank supports agriculture, manufacturing and other critical sectors heavily. In response to COVID-19 pandemic, CBN provided a combined stimulus package of about N3.5 trillion targeted at households, businesses, manufacturing and health care providers to strengthen the economy and developed a three-phased “Policy Response Timeline” to “guide crisis management and reboot of the economy.”
The first phase, “Immediate-Term Policies” (0-three months), involves supporting efforts of the Federal Government by supporting hospitals and pharmaceutical industry with low-interest loans to immediately deal with public health crisis, reduction of interest rates on intervention facilities from nine per cent to five per cent and granting additional one-year moratorium on CBN intervention facilities.
The second phase, the “Short-Term Policy Priorities” (0-12 months), according to CBN is “for repositioning the Nigerian economic space” which entails “strengthening the manufacturing industry, expanding the bank’s intervention all through the value chain and embarking on a project that would get banks and private equity firms to finance homegrown and sustainable health services that would help to reverse medical tourism in Nigeria.” It would also entail the promotion of “Infraco PLC”- a “world-class infrastructure development vehicle.”
The third phase, “Medium-Term Policy Priorities” (0-three years) would entail CBN’s initial intervention with N500 billion over the medium term targeted at manufacturing firms to procure state-of-the-art machinery and equipment and automated models that would fast-track local production and economic rejuvenation.
Still as part of its determined effort to rebuild the economy and put it on a path of sustainable growth, the CBN has had to formulate tough economic measures to check inflation, stabilise the Naira and put the economy on a right footing. Under Emefiele, the CBN introduced multiple forex system, created the Inter-bank/wholesale, invisible, Small and Medium Enterprises (SMEs) and the Investors/Exporters’ windows. These have brought stability to the forex market.
The Bretton Woods institutions, World Bank and the IMF, at their recent Spring Meeting in Washington D.C. the United States of America, endorsed the CBN’s monetary policy and acclaimed it as appropriate for the Nigerian economy at this time and urged the apex bank to enhance communication so as to improve the policy framework. This glaring endorsement by the IMF is obviously a vindication of the decision of the governor and his team to take the risk of diversifying the mandate of the bank to strengthen Nigeria’s financial system and support the growth of the economy.
By adopting critical control initiatives, the CBN has been able to hold inflation down and ensure rise in Gross Domestic Product supported by progress in the non-oil sector. Inflation has been on the decline since the last quarter of 2017 and further declined to 11.31 per cent in February 2019 from 11.37. According to experts, this has impacted positively on food inflation, which declined to 13.47 per cent in February 2019 from 13.51 per cent in January 2019, while core inflation declined marginally to 9.80 per cent down from 9.91 per cent in the previous month.
The apex bank’s intervention in the real sector and the foreign exchange market has led to further growth in the manufacturing sector buoyed by an effective implementation of the Economic Recovery and Growth Plan (ERGP) by the Federal Government which has also encouraged the inflow of Foreign Direct Investments (FDIs) into the country just as they have formed the major drivers of the economy.
It is commendable that CBN under Emefiele and team has imbued tremendous hope that is guaranteed to grant the Nigerian economy sustained rise. The past six years of his leadership have been very eventful as demonstrated in some of the major policies, programmes and developmental initiatives of the team. The CBN, in the last six years has proved to be made up of a winning team with effective leadership collaboration towards stabilizing the Nigerian economy. We urge all well-meaning Nigerians to rise up, shun cynicism and rally round the CBN Governor with the necessary support to achieve their set policy agenda towards making Nigeria a deserved economic hub of Africa and indeed the world, by so doing secure our pride of place in the comity of nations.