*Expert opinions and analysis hit had at his disastrous tenure
*Can Buhari sustain him at the risk of his re-election?
Assessment of the tenure of the Central Bank of Nigeria (CBN) Governor, Godwin Emefiele, will show that he has delivered a very shameful record. The only option for him is to resign or President Muhammadu Buhari demands for his resignation or he is allowed to account for his ‘sins.’
With Africa’s largest economy in recession for the first time in 25 years, the growing anger in the economy today should have been directed at Emefiele, whose insistence on keeping the Naira artificially high is believed to have worsened Nigeria’s oil-price induced slump.
Three years into his tenure, the flak is flying around the 55-year-old career banker once admiringly described by colleagues as a discreet man who gives little away.
A careful understanding of the economics mathematics will show that the current widespread discontent with the government’s Naira policy among senior figures from the worlds of business and investment is seemingly cooked. The CBN Governor is the major culprit.
Emefiele imposed currency restrictions in 2015, defying bankers’ advice to float the Naira and raise interest rates as some other oil exporters had done. Investors fled as the once promising emerging market was ejected from key bond indexes.
Economists, pundits, punters and investors say they have given up seeking any clues from Emefiele, who once read out a 32-page statement on interest rates without referring to the issue uppermost on his audience’s mind – the frozen Naira.
They are scathing about Emefiele, citing policies that have choked off the flow of dollars to official channels, fueled a Naira black market and ravaged the domestic industry beyond the understanding of simple economics.
“Emefiele is responsible for the currency mismanagement. If someone achieves to beat down a currency like that, then a foreign investor like me can’t support that,” Lutz Roehmeyer, director at Landesbank Berlin Investment, told Reuters recently.
“Absolutely no one trusts or believes that this central bank is still able to fix this,” he said, describing the forex policy sarcastically as a “masterstroke” that destroyed the economy.
Buhari’s desire for strong Naira: President Muhammadu Buhari’s desire for a strong currency is not hidden. He mentioned this desire in two different national broadcasts.
The 74-year-old former military ruler reminisced publicly about the 1980s when the Naira traded at 1.3 per dollar, apparently viewing currency strength as a matter of national pride.
In a recent news interview, Kingsley Moghalu, a former central bank deputy governor, says that does not absolve Emefiele of blame.
“Of course, there are many concerns that the bank is not being run in an independent manner in terms of policy … But we all know that one of the burdens central bankers always have to carry is to do the right thing even if it is not popular,” said Moghalu, who teaches now at Tufts University in America.
“So I don’t care what excuse you give, what explanation you give – the result is what we are looking at.”
Five exchange rates for the Dollar: Emefiele recently eased his grip on Naira rates by offering dollars to different users and there are now at least five exchange rates. Moghalu called the multiple rates “a perfect recipe for corruption.”
The central bank says a “managed float” is needed to offset low oil prices. The bank did not respond to requests for comment for this article just as Emefiele declined two interview requests.
Ordinary Nigerians are suffering widespread shortages of consumer goods, while factory closures, due to lack of raw materials and machinery have caused job losses.
Nigeria’s economy is heavily import-dependent. By not making dollars available on a transparent basis, the central bank drives importers to the black market. As a result, inflation has rocketed but there are also shortages of imported goods.
Black marketers are the kings of the economy: The only winners from this policy are the few who obtain dollars they can sell on the black market, while everyone else is a loser. Prices for rice, Nigeria’s staple food, have doubled in the two years since the policy came in.
“What are the measures taken by the central bank to rescue our currency Please, Nigerians are crying and dying,” read a comment posted on the central bank’s Facebook page on the 13th February as the Naira black market rate fell below N500 per dollar.
To console such citizens, Emefiele has suggested his import curbs are rejuvenating the domestic industry. In an 11th March speech, Emefiele flatly rejected devaluation.
It was “an opportunity to change the economy’s structure, resuscitate local manufacturing and expand job creation,” the speech, posted on the central bank website, said.
But while Emefiele has cited domestic tomato processing as a beneficiary of the import curbs, one new plant has shut, unable to import machinery or tomatoes.
At a meeting of Nigeria’s top economic advisory body to discuss the currency – Emefiele said everything was “under control” and called for “patience.”
He has also told reporters that the Naira will move in a 304-305 range, describing it as “a sort of floating market”.
Surviving being removed by Buhari: Emefiele, who ran one of Nigeria’s biggest banks, Zenith, between 2010 and 2014, was appointed by then President Goodluck Jonathan. He replaced Sanusi Lamido Sanusi who irked authorities by exposing a $20 billion scam at state oil firm NNPC.
After President Muhammadu Buhari won the 2015 election, many expected Emefiele to join the list of Jonathan appointees who were to have been fired. But the view now is that Emefiele suits Buhari, playing to the president’s desire for a strong currency.
Another stream of opinion claim that Emefiele has been “settling” the gods in the Aso Rock Villa including some of the President’s closest folks. They have promised him cover and they have sustained same.
One Nigeria-based banker said Emefiele remains in his job because he carries out Buhari’s wishes while getting some folks watching the door for him.
Emefiele has no respect for his deputies: Recently, Emefiele ran into a job-scandal where he singlehandedly employed a chunk of children of parents in the different corridors of government. When the media exposed the scandal, he was alone like a tadpole on the beach.
A former government economic policymaker said the central bank chief’s relations with his deputy governors were so poor but he felt he could ignore them because he had Buhari’s backing.
He has some defenders and while Buhari is in office, political analysts believe Emefiele will also remain in his post. This is because he is paying the right price to the right defenders.
Emefiele shunning the media: CBN Governor Godwin Emefiele has reduced public engagements since the last one year and has not given interviews to foreign media in over a year. He did not attend a Nigerian investment roadshow in 2016, sending a deputy instead.
Perhaps that was down to his experience at the 2015 summer’s roadshow in London.
One investor at that meeting recalled Emefiele telling fund managers and analysts that the Naira was solid and there was no issue with the foreign exchange market. For that he was angrily berated by some investors present at the meeting. He felt so embarrassed.
Most investors will want to see more than a floating Naira before they return to Nigeria, said John Bates, a strategist at PineBridge Investments. A key question may be whether Emefiele completes his tenure, which runs until 2019.
Another question is that, can the Federal Government, within the mantra of his anti-corruption mandate, sustain a seriously tainted and scandal-infested Emefiele till 2019? A retention of Emefiele in office is a high risk of the second term tenure of President Muhammadu Buhari.
“They need to find credible speakers. There is an element of mistrust in the market and I am referring to the central bank and the presidency,” Bates said.