If there is a government official who should embody humility, it is the Governor of the Central Bank of Nigeria (CBN). The governor plays a crucial role in the economy, which can be divided into the real and monetary sectors, with the latter being significantly influenced by the CBN’s actions. This position is both a privilege and a responsibility that demands a high level of dexterity and humility. Godwin Emefiele, the current CBN Governor, acknowledges the authority and significance of his role; however, he has yet to exhibit the necessary humility. Instead, he appears to view his position as one that grants him power over the nation he is meant to serve, placing himself above Nigerian institutions, the constitution, and the citizens. His repeated disregard for summons from the National Assembly, often accompanied by flimsy excuses, further exemplifies this attitude. When citizens urged him to reconsider the deadline for currency swapping due to the scarcity of new notes, he dismissed their concerns and instead offered ATM cards for withdrawals of local and foreign currencies, raising questions about who the CBN truly serves.
To evaluate Emefiele’s performance in managing Nigeria’s monetary policy, it is essential to first outline the traditional functions of a central bank. The CBN is the sole institution authorized to issue domestic currency, serve as a banker and advisor to the government, act as a lender of last resort to commercial banks, and safeguard cash reserves and foreign exchange. The CBN’s core mandate, as established by law, includes issuing legal tender currency, maintaining external reserves to protect the currency’s international value, promoting a sound financial system, and advising the Federal Government on economic matters. The primary objective of the CBN should be to produce and distribute Nigeria’s currency fairly across the country, rather than focusing on the production of ATM cards. Unfortunately, the distribution of the new currency has been inequitable, with many banks collecting old notes without providing adequate replacements. For instance, a recent attempt to withdraw cash from an ATM resulted in no funds being dispensed, a common occurrence across the nation. A cashless economy does not equate to a complete absence of cash; even advanced economies maintain numerous ATMs to facilitate cash access. The current push towards a cashless system seems to mask underlying inefficiencies, and the unavailability of currency indicates a failure on the governor’s part to fulfill this fundamental function.
The second core responsibility of the CBN is to maintain external reserves to uphold the international value of the naira. When Emefiele assumed office in 2014, the official exchange rate was N165.15 to the dollar, while the black market rate was N190. Today, the official rate has risen to N440, with the black market rate hovering around N750. This depreciation undermines foreign investment and the repatriation of export proceeds. Under Emefiele’s leadership, significant amounts of foreign currency were discovered in a flat in Ikoyi, Lagos, raising questions about who is accountable for the custody of such funds. Additionally, during the intervention programs of 2015, Emefiele reportedly distributed foreign currencies to commercial banks for distressed businesses, yet there is no record of how these funds were allocated or whether they were returned. Following inquiries from the House of Representatives, a report on this matter is still pending nearly five years later. The governor has also taken on the role of a commercial bank manager by directly providing funds to farmers, despite the existence of the Bank of Agriculture, which is better suited for such interventions. He later lamented that these farmers were not repaying the loans, even as he claimed they supported his political ambitions with substantial contributions.
Moreover, the CBN has prioritized funding for foreign travels and luxury imports over supporting local industries. The massive depreciation of the naira has been unjustly attributed to external factors, such as currency exchanges and students studying abroad, rather than acknowledging the CBN’s own shortcomings. The bank’s competition with commercial banks has further weakened the financial system, as it engages in retail banking under the guise of promoting interventions. The introduction of CBN-branded ATM cards is an unnecessary deviation from its core functions, as individuals do not bank directly with the CBN. The added costs associated with transferring funds to these cards and withdrawing cash represent a financial burden for consumers.
Lastly, the CBN’s role as a banker and advisor to the government has largely revolved around financing budget deficits and underwriting government securities, leading to rampant inflation and crowding out private sector investment. This has resulted in decreased industrial capacity, lower income levels, and reduced tax revenue, contributing to rising unemployment. The CBN’s monetary policy framework, which aims for single-digit inflation, has failed, with current rates exceeding 20 percent. Effective performance in this role would warrant praise; however, the CBN governor must reflect on his actions and adopt a more humble approach. He should comply with legislative inquiries as mandated by the 1999 Constitution and cease seeking refuge in the presidency. Acknowledging the inadequacies in currency distribution and extending the deadline for currency swapping is crucial, as the current restrictions on spending due to the shortage of new notes are detrimental to the economy. In advanced economies, consumer spending is a key indicator of economic performance, which is why ATMs are strategically placed to ensure easy access to cash. Encouraging consumer spending is vital for boosting production and employment.
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