Godwin Emefiele: The Quintessential CBN Governor

For an economy like Nigeria’s, it takes the ingenuity of managers to surmount the intractable challenges that are associated with its management. Mr. Godwin Emefiele, Governor of the Central Bank of Nigeria, appeared to have been cut out for the job as he not only leads the CBN to maintain monetary stability, safeguard the country’s external reserves, act as a banker and financial adviser to the federal government, act as a lender of last resort to banks, but also to provide succour where none may have been expected. As he wraps up his engagement at the CBN, Kunle Aderinokun writes about the man, who is humility personified, and his contributions towards ensuring integrity of the economy

Whenever the name, Godwin Emefiele is mentioned, what readily comes to mind is humility. He is not one who is given to frivolities. Governor Emefiele combines a great humility with an amiable mien, under which lies the toughness and knack for performance-cum-excellence. These, he exhibits, as he discharges his duty at the commanding height of the nation’s apex bank.

Emefiele was appointed the CBN governor, when no one gave him any chance to become one; that he has served two presidents, namely former President Goodluck Jonathan and President Muhammadu Buhari is a testament to his sound management policies.

Prior to his appointment to the exalted position on June 3, 2014, Emefiele was the group managing director/chief executive officer of Zenith Bank Plc, the post, he assumed after spending over 26 years in commercial banking. He had won the best graduating student award when, in 1986, he obtained a Master’s Degree (MBA) in Finance from the University of Nigeria, Nsukka, the same school, where he studied banking and finance and graduated with a second class upper division, two years earlier. He later had executive studies at Stanford University, Harvard University and Wharton School of Business. Even though his five-year tenure ends on June 2, Buhari has the discretion to renew his appointment.

Under Emefiele’s leadership, the CBN has recorded many feats, notably attributed to his uncanny ability to think outside the box when faced with the most difficult situation.

At a time when Nigeria was at a crossroads, Emefiele as the CBN governor, proved its mettle. He drove the apex bank to rise to the occasion to bring the economy out of crisis and forestalled another one. For instance, he held forth on the economy, when there was a lacuna on the fiscal side, as a result of president’s delay in the appointment of his ministers, particularly the finance minister, for six months.

It was to his credit that the apex bank defied the odds and barred importers of certain 41 items from accessing foreign exchange from the interbank market, which helped to avoid depletion of the foreign reserves. The 41 items were later increased to 43.

The CBN, had on June 23, 2015, in a circular signed by its Director, Trade and Exchange Department, Mr. Olakanmi Gbadamosi, explained that, “In the continuing effort to sustain the stability of the forex market and ensure the efficient utilisation of forex and the derivation of optimum benefits from goods and services imported into the country, it has become imperative to exclude importers of some goods and services from accessing foreign exchange at the Nigerian foreign exchange market to encourage local production of these items. According to the apex bank, the implementation of the policy will help conserve forex reserves as well as facilitate the resuscitation of domestic industries and improve employment generation.

“For the avoidance of doubt, these items are not banned, thus importers desirous of importing these items shall do so using their own funds without any recourse to the Nigerian forex market,” it added.

This bold step by the CBN later turned out to be the saving grace for the economy as it helped in bolstering the economy during the recession it entered into in 2016, and gave it the fillip to exit same. Emefiele sometime last year said the bank’s restriction of foreign exchange access to 41 import items in 2015 was in national interest as it helped to save the economy from collapse.

Even though he pointed out that the policy was restrictive of trade, it was necessary to protect the economy from the importation of items that could dampen the local production and economic growth.

He asked then: “Should Nigeria with insatiable taste for foreign goods to the detriment of the domestic economic realities (unemployment and imported inflation) throw its borders open to indiscriminate importation of goods and services?”

“This was the prevailing condition in Nigeria before the introduction of restriction of official foreign exchange for the importation of 41 items.

“It was an eclectic policy carefully crafted with a view to reversing the multiple challenges of dwindling foreign reserves, contracting Gross Domestic Production – recession and an embarrassing rise in the level of unemployment confronting the economy.

“The implementation of the 41 items, in addition to the other complementary macroeconomic policies, no doubt, was effective in lifting the Nigerian economy out of recession.

“For example, the real Gross Domestic Product (GDP) grew by 1.40 per cent in the third quarter of 2017, up from 0.72 per cent, and contraction of 0.91 per cent in the second and first quarter of 2017, respectively. Also, there has been improved accretion to the country’s reserves,” the governor explained.

The nation’s foreign reserves stood at $44.7 billion as of April 3, according to the data published by the CBN. It rose to $44.43 billion on March 29 from $43.7 billion on March 22, 2019, representing an increase of $730 million.

Rising prices of oil at the global market and a surge in oil production in recent months may have aided the accretion to the foreign reserves, but CBN’s perennial efforts at building the reserves are very notable.

The CBN under Emefiele’s leadership has been aggressive in building the country’s foreign reserves with a view to protecting the value of the naira and insulating the economy from external shocks.

The foreign reserves, which stood at $23 billion in October 2016 because of the ‘haemorrhaging of foreign exchange’, significantly, moved up to a five-year high of $47.3 billion on April 5, 2018.

The last time the country recorded FX reserves at that level was in July 2013.

Besides, Emefiele-led CBN has also been able to ensure exchange rate stability from over N525 to the dollar in February 2017, to about N360 to the dollar, on the parallel market. Foreign exchange supply has also improved since the establishment of the Investors’ and Exporters’ Window, with inflows of over $50 billion through the window alone from April 2017 to date. The purpose of the window, according to the apex bank, was to boost liquidity in the forex market and ensure timely execution and settlement for eligible transactions.

In disclosing the inflow figures, CBN’s Director, Corporate Communications, Mr. Isaac Okorafor, stated that out of the total amount, the apex bank purchased about $9.67 billion. The surge in the inflows to the I & E window was attributed to offshore investors’ interest in Nigeria’s fixed income securities.

As part of its development finance initiatives, CBN in the five years of Emefiele, made a series of interventions to support farmers as well as small and medium entrepreneurs. Notable amongst the intervention programmes is the Anchor Borrowers’ Programme (ABP). ABP is in line with apex bank’s developmental function. Essentially, it was aimed at creating a linkage between anchor companies involved in the processing and small holder farmers (SHFs) of the required key agricultural commodities.

According to the CBN, the programme thrust of the ABP is provision of farm inputs in kind and cash (for farm labour) to small holder farmers to boost production of these commodities, stabilize inputs supply to agro processors and address the country’s negative balance of payments on food. At harvest, the SHF supplies his/her produce to the Agro-processor (Anchor) who pays the cash equivalent to the farmer’s account.

ABP has helped in making Nigeria become a major producer of rice, a clear departure from its former position of net importer of rice. Statistics revealed that over 900,000 farmers cultivating about 835,239 hectares, across 16 different commodities, had so far benefited from the programme, which has generated over 2.7 million jobs across the country.

No wonder that given the success recorded through ABP in rice and maize cultivation, the Monetary Policy Committee last November, recommended that the programme should be applied to other areas such as palm oil, tomatoes and fisheries amongst others.

Realising that over $500 million was being spent annually on the importation of palm oil; and this necessitated the central bank to include the produce among items not eligible for forex.

Emefiele had explained that efforts at supporting small scale farmers and SMEs were based on awareness of the critical role they can play in supporting our economic recovery and growth, as well as in creating job opportunities for millions of Nigerians.

“So far, the CBN has through its MSME fund disbursed over N100 billion to the MSME sector, but we still feel a lot can be done. Under the auspices of the Bankers Committee, the sum of over N60 billion has so far been set aside under the AGSMIES fund to fund micro, small and medium scale enterprise businesses in the agriculture and manufacturing sectors of our economy.

“The CBN recognises that the greatest challenge confronting MSMEs and local farmers is access to credit, and that to unlock the growth potential in our country; these groups must access funding seamlessly.

“In response to this challenge, the CBN will in due course take action that will directly bring banking services to the rural communities through the licencing of a national microfinance bank, which will have a presence in all local governments in Nigeria, thereby supporting the channelling of credit to our rural communities.

“We will continue to explore ways, in partnering with the fiscal authorities, on how we can best provide farmers and SMES with the support they need to expand their operations,” he explained.

Just late March, to the surprise of all and sundry, the Monetary Policy Committee (MPC) chaired by Emefiele cut the Monetary Policy Rate (MPR) by 50 basis points from 14 per cent to 13.5 per cent after keeping the benchmark unchanged for 33 months since June 2016.

In announcing the decision, Emefiele, at the end of a two-day MPC meeting in Abuja, said the rate cut had become inevitable in order to boost economic growth.

Nigerians had for long craved for a loosening of the monetary policy stance as high cost of borrowing appeared to slash returns on businesses and sometimes made it difficult for them to break even as well as discourage entrepreneurship amid inflationary pressures.

Essentially, the MPR acts as the baseline for interest rates in the economy and goes to determine the cost of borrowing from commercial banks.

Nevertheless, the CBN retained the Cash Reserve Requirement (CRR) at 22.5 per cent and liquidity ratio at 30 per cent.

But, according to Emefiele, the rate cut does not necessarily indicate an end to the monetary tightening cycle even though banks would be expected to adjust to the loosening in MPR so that its positive impact could be felt by customers.