Godwin Emefiele: Incompetence, impunity and inordinate ambition brought us here
Nigeria's Central Bank Says a Website (AbokiFX) Has More Power Over the Country's Exchange Rate
The Central Bank of Nigeria and the Central Bank Governor, Mr. Godwin Emefiele’s inconsistent and bad policies, incompetence, and politics, as well as their lawbreaking, are responsible for Nigeria’s economic pain. The CBN and its Governor boldly declared that a website (AbokiFX) has more power than them in influencing the country’s exchange rate.
Public institutions and officers exist to solve problems. Many times they don’t and therefore we have a country going nowhere, but it becomes even worse when they rather create problems for us. The inability to do one’s work or do it well is called ‘incompetence’. Such a person is incompetent. Presently, the institution, and individual leading this charge in Nigeria by their incompetence causing the country great pain is the Central Bank of Nigeria (CBN), and its governor, Godwin Emefiele, both of whom have not only been grossly incompetent, but have created more problems for the country and its citizens, and have done so with impunity!
Also Read: First Bank: Otudeko Eats His Cake, Emefiele Keeps His
It isn’t enough or okay to state this as an opinion, it becomes critical for an independent, disinterested, and just arbiter to interrogate the issues and grant a verdict, for the record, and to arrest the slide.
To be sure, the number 1 role (of 5 principal roles) of the CBN is to ensure monetary and price stability. It’s the CBN governor’s role to run the Bank effectively to achieve its mandate. This, Emefiele himself, emphasised in his inaugural address on 5 June 2014, when he first took office, that his personal vision and number 1 assignment as CBN governor was price control. This he reiterated in 2019 when his 5-year tenure was renewed.
If, therefore, there has been growing inflation with skyrocketing prices, a weakened currency losing its international value, we need not look at Lord Lugard and the Amalgamation, the circumstances of the Independence in 1960, the global cost of crude oil, or any other external factors first, as the cause of our woes. A public institution and officer, whose job it is to prevent such has failed and/or is failing at their job, other factors notwithstanding. It’s this simple!
How We Got Here
As of the time Godwin Emefiele took office, the official naira/US dollar exchange rate was N155/$1, so he said himself in his inaugural speech, but as of Thursday 23 September, it closed at N413.63 at the Investor & Exporter forex (foreign exchange) window (a 166.86% increase). Inflation, he said, was at 7.9% (a 6-year low at the time) but grew under him to 18.17% as of last March, according to the CBN itself. Bad, inconsistent and contradictory policies; haphazard implementation, politics, incompetence, illegality, and impunity brought us here. A few illustrations should suffice:
On 23 June 2015, the Bank under Emefiele banned 41 (later expanded to 44) items from importation, meaning forex couldn’t be accessed for these at the official rate. Those who required them were asked to access the dollar at the parallel (black) market. These aren’t all luxury consumables or finished products. On this list are materials needed for construction, manufacturing, and so on, which are not, and some cannot be sourced in Nigeria. By making it impossible to access forex at the official rate for these, it meant paying higher at the parallel market. Higher costs of accessing raw materials translated into higher production costs translating into higher cost of the products, and, therefore, an increase in the price of goods.
Two months ago, on 27 July, the CBN turned around to frustrate the parallel market and those who rely on it by announcing that it had stopped providing forex to the parallel market, and in fact, just recently during his disastrous press conference last week, Emefiele boasted that he didn’t recognise the parallel market. How then does he expect manufacturers to access forex for imported raw materials which are on the list of 44 items, for instance? With forex scarcity and increasing pressure on it, imagine what becomes of its price. It should, therefore, surprise no one that the black market rate of the US dollar recently hit N575/$1, as any observer would be able to assess what is likely to come in the days ahead. What becomes of products in the market should surprise no one either.
On this list of 44 banned items is milk. Nigeria produces the lowest quality and quantity of milk per cow in the world, a measly 2 litres/day of 19 million heads of cattle (not all of them are female, milk-producing, by the way). The global standard is 10-15 litres/day, with Kenya, for instance, having the capacity for up 70 litres/day. Clearly, what we produce isn’t enough for the young and increasing population. Banning importation to make up for what we can’t produce now makes milk, needed for child nutrition, expensive and out of the reach of many, along with its consequences.
At its 126th Monetary Policy Committee (MPC) meeting, the CBN decried the increasing debt the country was piling. Emefiele said, ‘…mounting public debt remains a headwind to economic growth. The huge concerns expressed in the last MPC meeting about the increase in the total public debt remain unabated.’ Yet, this same individual has been illegally lending to the federal government trillions of naira every year, to the extent that the loans grew from N648 million in 2015 to N15.51 trillion as of the last count this year!
A Culture of Anyhowness Where Professionalism is Required
Section 1(3) of the Act says the Bank is independent, but it is in reality everything but that. The problem lies in the Act itself, and the wrong precedent of Sanusi Lamido Sanusi’s removal by then president, Goodluck Jonathan, an unprecedented violation anywhere, but Emefiele has taken his subservience to a ridiculous level. He supported Buhari’s controversial closure of land borders in the south, a policy Buhari was to later eat humble pie and admit was ill-advised. That was none and should never have been Emefiele’s business.
When the State Security Services (SSS) physically went after bureau de change operators in an ostensible attempt to defend the naira, Emefiele supported it. Using brute force to protect any currency is strange, and no investor wants anything to do in such an environment. Following the #EndSARS protests, Emefiele had bank accounts of suspected protesters sealed by the courts of bogus, malicious charges. This was not his job and was none of his business. These are some ways he has reduced the Bank and the office of the CBN governor into a political tool of the regime, thereby eroding the independence of the Bank, contrary to section 1(3) of the CBN Act.
The shameful act of scapegoating a website and threatening its founder was just pathetic. Is it not embarrassing that a mere website was being made to seem more formidable than an entire central bank of a country in determining the strength of its currency? Is Nigeria a banana republic? Well, the website no longer publishes forex rates but the naira is still sliding. It shows that Emefiele didn’t know what he was saying and the responsibility for the crashing naira and whose failure it is, lies elsewhere, certainly not with the website.
Lending to the government above 5% of the previous year’s revenues is expressly forbidden by the CBN Act (under Ways and Means) in section 38(2). Section 38(3) says the loans to the federal government must be paid by year-end and no further loans are to be advanced until what was loaned is paid. Both provisions are routinely flouted, with dire consequences on the naira and the economy. In 2020, Emefiele and the Bank lent N2.8 trillion representing 62% of 2019 revenues, and plan to continue doing so. This has its grave consequences.
It’s clear, the CBN and Emefiele’s inconsistent and bad policies, incompetence, and politics, as well as their lawbreaking, and how this causes the mess we are in. Any other factor is at best an addition, not the main cause(s).
Approaching the Courts
It’s to avoid this issue being left to speculation and all manner of analyses and opinions expressed, without a uniform definite stand, that we approached the Federal High Court Abuja, in Sesugh Akume v. Central Bank of Nigeria & Godwin Emefiele (marked FHC/ABJ/CS/1051/2021). The suit has strong corroborating evidence on oath by my good friends Dr. Samson Galadima Simon, and Tosin Adeoti, global economy watchers and well-regarded financial sector experts and analysts, inviting the court to kindly look at what is before it and determine these issues once and for all. This is so that they are no longer up for speculation or opinion depending on where/how one leans.
We want the court to determine whether the CBN and Emefiele have been grossly incompetent or not. And also, whether this has caused us the mess we are in or not; whether instead of solving our problems when public institutions or officers fail to do so but rather cause us problems, they can be held accountable or liable, or not? These may not be usual prayers in court, but worth it. It is our firm belief that we have been underutilising the courts, as the law has many more functions in fixing our society, than the traditional ones of interpreting the law alone, and must do otherwise henceforth.
Also Read: Nigeria’s inflation problem and the ‘Gbatueyos’ at the CBN
We ask the court to determine whether Bank lending to the federal government beyond 5% of the prior year’s revenues is a violation of section 38(2) of the CBN Act, or not and whether lending further when previous loans are unpaid is a violation and abuse, or not. It’s not enough to talk about it, let the courts decide once and for all. The only order we ask is for the court to stop the CBN from further lending to the federal government until the N15 trillion naira owed it is fully refunded, and to never lend beyond 5% of the previous year’s revenues.
The Governance Benefits of this Effort
The suit also seeks to raise some broader questions and challenge some of the numerous inconsistencies in the Act itself. For instance, section 52 says the CBN and its officers cannot be sued for their incompetence in doing or failing to do their jobs, but does this include when they break the law also? Section 11 states when officers shall cease to hold office for violating the Act (not the focus of this suit).
How then can the court determine whether there is a violation or not when the very Act says they can’t be sued in the first place? If any provisions of the Act are non-justiciable, as there are in the Constitution, and the Bank with its officers have immunity from prosecution, why then do we have the sections in the first place? What incentives or consequences are there in obeying or violating them?
The Act makes it possible for the CBN governor to determine who sits on the Bank’s board, and the MPC both of which s/he is the chairman. What safeguards are there to prevent having only yes men/women on either or both? If the governor is wrong on an issue, the institution should be resilient enough to protect the system and avoid costly errors. As it is now, Emefiele’s incompetence, impunity, and lawlessness are the Bank’s. It shouldn’t be.
Section 1(3) says the Bank is independent, yet in several sections the Act places the finance minister above the CBN governor and makes him/her answerable to the minister (who is in charge of fiscal policy NOT monetary policy) on matters of monetary policy which the CBN is in charge. It also makes the CBN subject to the president and his/her whims and caprices even on matters s/he may have no competence. The president approves (or not) decisions of the CBN, thereby eroding the independence of the Bank, yet another strange, unprecedented practice in central banking the world over.
The suit hopes to have these addressed, and willy-nilly will, whichever direction the verdict of the court goes in the end. We believe that the Central Bank of Nigeria as an institution will ultimately be better served by the determination of this suit; and we would have taken another step in deepening the trust levels in the social contract between the citizens and public institutions created to serve us all. A date is yet to be fixed for the hearing.
A very bold and noble move, indeed!
If you ask me… the CBN governor has become an institution skewed more to the political than monetary! What a shame!
But, I’m surprised you did not touch on the CBN governor’s shameless banning of cryptocurrency, especially the BTC!