Emefiele’s second term at CBN

The Senate last week confirmed the appointment of Mr. Godwin Emefiele for a second five-year term in office as Governor of the Central Bank of Nigeria, CBN. This followed his nomination by President Muhammadu Buhari for confirmation as provided for statutorily. Emefiele, a former Managing Director of Zenith Bank, was first appointed to the same […]

The Senate last week confirmed the appointment of Mr. Godwin Emefiele for a second five-year term in office as Governor of the Central Bank of Nigeria, CBN. This followed his nomination by President Muhammadu Buhari for confirmation as provided for statutorily. Emefiele, a former Managing Director of Zenith Bank, was first appointed to the same post by former President Goodluck Jonathan on June 3, 2014.

Emefiele becomes the first CBN governor since 1999 to bag a second term. His predecessors Joseph Sanusi, Chukwuma Soludo and Sanusi Lamido Sanusi all served single terms of five years each. This appointment to a second term therefore comes with high expectations, especially at this time that the Buhari administration itself is also going for a second term. His re-appointment is therefore seen as a mark of high confidence that the administration reposed in him in the four years that he managed monetary policy alongside it.

Emefiele’s reappointment did not come without mixed reactions. Several commentators have hailed it as a sign of continuity for the administration and the country in areas of positive outcomes with respect to CBN’s monetary policy initiatives under him in the last five years. The Buhari administration was slow to develop a fiscal policy of its own. Emefiele and CBN tried to fill in the gap with a robust monetary policy. Added to this were CBN’s strategic interventions in key sectors such as agriculture, especially its well-known Anchor Borrowers Program. This program is widely credited with boosting rice production in some states, notably Kebbi and Ebonyi.

Monetary policy, however well-articulated and however vigorously enforced, can only achieve so much in the absence of a robust government fiscal policy. CBN’s costly weekly interventions in the forex market to boost the naira, for example, and its refusal to sell forex for some import items, are supposed to be complemented by other fiscal measures but these were hardly seen in coming.

Emefiele’s task for the second term in office with respect to the slowly developing fiscal policy of the administration is clearly cut out as the continuity of support for the former. Experts and industry sources rate the CBN’s interventions in agriculture, real sector and foreign exchange transactions as providing hope of better days to come for the Nigerian economy.

However, there is also the complaint that Emefiele’s reforms especially with respect to agricultural loans are in the main elitist. Low net worth farmers still complain of being left out and they have difficulties assessing the loans from commercial banks. Even where they gain access to the loans, the terms and conditions are still very difficult for them to meet. On the other hand, there is the problem of poor loan recovery from the farmers. It is a tricky art to find the right formula for extending access to loans to smaller farmers and yet ensure that these loans are recovered, since they are from the public till. Emefiele must find the right formula.

The ultimate challenge for Emefiele’s second term shall be the actualization of the star project of the administration, the Economic Recovery and Growth Programme (ERGP) which was launched in the wake of the economic recession of 2016. Given the slack in the catch-up game of the fiscal policy, the monetary component of the country’s economic policy will have to save the ERGP. Of concern to economic policy analysts is the many handicaps confronting operators in the real sector of the economy. This situation may still disallow its growth rate to go beyond the stunted 1.5% as against the population growth rate of 3%.

The challenges facing the CBN governor in his second term are dauting but we are confident that Godwin Emefiele is up to the task. He has already garnered invaluable experience in his first five years on the job. We wish him a very successful second term in the CBN top job.