Building a People-focused Central Bank

Nwaogwu Eleko

On assumption of office in June 2014, the Central Bank of Nigeria (CBN) Governor, Mr. Godwin Emefiele, had in his inaugural speech pledged to create a people-focused central bank.

According to Emefiele, beyond its traditional role, central banks in developing countries ought to be playing more important roles in supporting the activities of the fiscal authorities.

This, clearly has been the driving force behind the aggressive development finance role of the Emefiele-led CBN.
Efforts by the central bank in this regard received the commendation of the organised labour in the country.

According to members of the trade unions that spoke at a recent stakeholders’ forum organised by the CBN, efforts by the central bank had been geared towards promoting the welfare of Nigerians through job creation and increased local productivity.
According to the labour leaders, these policies are visible in the agriculture and textile industries.

They also noted that a bailout fund to states initiated by Emefiele in 2015, played a major role in offsetting backlog of workers’ salary and in reflating the economy.

In addition, they noted that the removal of 43 items from the official forex market also contributed in boosting local production.
During the interactive sessions which took place in Owerri, Imo State, Lagos and others, there were representatives from the National Union of Textile, Garment And Tailoring Workers Of Nigeria (NUTGTWN) and other private sector unions affiliated to the Nigeria Labour Congress (NLC).

The organised labour itself, which comprised the NLC, Trade Union Congress (TUC) and United Labour Congress (ULC), all together, had their representatives present.

Speaking, General Secretary of the National Union of Textile Garment and Tailoring Workers of Nigeria (NUTGWTN), Comrade Issa Aremu said the current CBN has done well through its numerous interventions in the various sectors of the economy.

He, however, advised that the country, through CBN should work towards a single-digit inflation rate, saying the CBN should be supported to revive the comatose manufacturing sector of Nigeria.

“I must say that the re-appointment of the CBN governor for second term is commendable. From the day he assumed office as the governor of CBN, his goal has been to have a monetary policy that will improve production and create jobs.

“For us, you can agree with me that if there are no companies, there will be no workers and if there are no workers there cannot be a union. And if there are no unions, there cannot be leaders of unions that are here.

“So, I think we should partner with CBN as organised labour to realise its objectives especially in the area of development financing. There was a time Nigeria was a workers’ destination for Africans and other nationals.”

According to Aremu, at a point in Nigeria’s history, the country survived on revenues from the non-oil sector, to the extent that it became a dominant exporter of agricultural produce into the global market. Some of these products include, cocoa, groundnut, cotton and palm oil.

Nigeria’s focus in agriculture supported the raw material needs of the industrial sector and created employment opportunities for millions of Nigerians, he added.

Aremu stated: “There is availability of local rice in Nigeria. The argument of CBN concerning the 43 items is tenable. Why should we make scarce foreign exchange available for people to import products that we can produce within the country? For us today, that has protected a lot of jobs.

“I think we should commend the CBN and encourage the apex bank to continue in its good job. We have to support CBN because if Nigeria can produce those 43 items locally, our factories will recover. Already, about 2.8million jobs have been created through the CBN ABP interventions. You can imagine if we replicate that in other sectors like Textile and others.

“Emefiele has a way of interacting with stakeholders and taking ideas from such interactions into consideration, so he is a comrade,” Aremu concluded.

Speaking further, the CBN Governor who recently assumed office for a second term of five years, said the policies of the apex bank in the past five years had been focused on protecting the purchasing power of the poor and vulnerable persons in the country.

According to Emefiele, the apex bank is very comfortable staying on the side of the weak, vulnerable, and poor masses and protecting their purchasing power.

He argued the central bank’s development finance initiatives and foreign exchange intervention are targeted at supporting vulnerable persons in the society.

“Sadly, while most people in this room may be spared the brutal consequences of inflation, the majority of Nigerian masses and fixed income earners are not.

“The poor masses are the ones that bear the brunt of losing purchasing power of the meagre salaries they receive, ever so infrequently.
“Indeed, given the current resistance to pay increased minimum wage of N30,000, one wonders how the fixed income earner would survive the consequences of inflationary pressure arising from the passthrough from exchange rate depreciation being proposed by the naysayers,” he told his audience.

Emefiele said the task of building a stronger economy was far from complete; with the pace of Gross Domestic Product (GDP) growth still very fragile and badly lagging behind population growth rate of 2.7 per cent. He reiterated the fact that the level of credit to the private sector by financial institutions was still very low.

According to the CBN Governor, domestic industries particularly high employment generating sectors like textile and garment sectors have continued to deal with rampant smuggling and dumping of materials through our borders.

“These challenges no doubt call for action by the monetary and fiscal policies through the implementation of policies; the spirit and letter of which must be respected by all,” he added.

He maintained that the bank would continue to defend the naira, saying that the CBN Act demands that the Bank “defend” the Naira using the foreign exchange reserves.

“In effect, the CBN would be disobeying the law establishing it, if it sits idly by and allow the Naira to be determined wholly by the so-called market forces.

“Second, those who call for floating of the currency betray their willful ignorance of the effects of significant depreciation, however short-lived, on inflation.

“Several empirical analyses have shown that the pass-through of changes in the exchange rate on consumer prices is almost one-toone. “This implies that for every percentage point depreciation in the Naira, there is almost the same rise in inflation.

“I have also heard a lot of people suggest that all they want is for the CBN to reduce interest rates. In fact, for us at the CBN, achieving a low interest rate regime will give us a great sense of accomplishment.

“Indeed, given our determination to stimulate economic growth, it is obvious that we would want to pursue a policy of moderating interest rates. “Yet, in an environment where inflation recently was a high as 18.72 percent, it would be counter-productive to reduce interest rates because any attempt to ease interest rates under a high inflationary environment will no doubt retard growth.

“While we are delighted that we have been able to fight inflation down to very low double digits, we believe it is still too high for the Nigerian economy. Our goal is to moderate it down to single digits.”

To the CBN Director of Corporate Communications, Mr Isaac Okoroafor, the CBN Governor is called a comrade because, “the first day he took office, his vision was titled: ‘a people focused central bank.’

“It means that all the policies from the central bank was to be underpinned and dictated by the welfare of the people.

“Following from that, he initiated the Anchor Borrowers’ Programme which was targeted at the people within the base of the pyramid; the farmers. He looked at millions of Nigerian workers who have been rendered jobless for years because the elite conspired among themselves to be exporting our jobs abroad by massive importation.

“They imported tooth paste, tomato, garri, palm oil, Nigerian print made in China, eggs from South Africa,” Okoroafor said.
“At a time, about 20 million eggs was being imported into the country every day.

“We depended on wheat from Zambia. We imported Fish from Norway. They import toothpick. Aswani market in Lagos used to be the largest textile market in Africa. People from Togo, Mali, Niger, Ghana Siera Leon and even central Africa used to come their to buy Nigeria prints. Today, Aswani is a shadow of itself,” the director added.

He explained that all these were imported using Nigeria’s foreign exchange. Inflation which was the greatest enemy of the workers was high and the CBN looked at all these and said ‹why should we keep importing?’”

Considering the country’s huge youth population, the central bank recently unfolded its five-year policy plan which among other things is focused on the creative sector.