•Stakeholders table agenda as he assumes office
Central Bank of Nigeria (CBN) Governor, Godwin Emefiele, assumes office tomorrow with a plate full of requests and suggestions from the gamut of bankers, economists, financial analysts, insurers, manufacturers and other players.
Godwin Emefiele
He comes to the job from Zenith Bank where he was Group Managing Director/Chief Executive Officer, and replaces Lamido Sanusi.
Stakeholders want Emefiele to depart from the worn out track created by Sanusi. He should stimulate the economy, create jobs and turn around the living conditions of Nigerians, they said.
Stakeholders who bared their minds to TheNiche unanimously agreed that the CBN should not continue to defend the naira and fight inflation at the expense of the economy.
They warned Emefiele not to get involved in politics and controversies and instead, concentrate on core banking activities.
Even though they praised the positive policies of the former CBN leadership, the stakeholders – also drawn from the capital market and organised labour – warned against erosion of the autonomy of the CBN, which is now under attack.
Nigeria Labour Congress (NLC) First Vice President, Issa Aremu, advised Emifiele to open new frontiers and consolidate on the positive gains of past.
According to him, one of the gains of the past is the relative stability in exchange rate and single digit inflation. He, however, urged Emefiele not to lavish effort to sustain naira stability at the expense of the economy.
Bestworth Assets and Trust Managing Director, Adesola Adeniyi, urged him to determine from outset what the CBN should achieve under his watch.
His words: “Does the CBN want to stimulate growth of the economy, encourage investment, help banks to be able to lend more? Why are the banks not lending as they should to the manufacturing sector? If they have certain fears or challenges, how can we mitigate these challenges?
“What do we need to put in place to encourage banks so that they will lend more to manufacturers and there will be real production and jobs will be created and the circle continues?
“When there is more employment, people will be more financially empowered and then the per capita income will continue to improve. These are some of the things that we should concentrate attention on.”
Manufacturers raised the bar for Emefiele, demanding single digit interest rate.
They said without it the economy may be left completely in the hands of foreign investors who have access to cheap funds from their home countries.
Lagos Chamber of Commerce and Industry (LCCI) Director General, Muda Yusuf, reiterated that the manufacturing sector was gloomy in the first quarter of the year because of bad micro and macro-economic policies.
He blamed high interest rates on the tight monetary policy of the CBN, saying with the stability in the economy, there is compelling need to lower interest rates so that the cost of funds will reduce to enable made-in-Nigeria products compete with imported variants.
In the words of Aremu, the rates are not industry-friendly and need to be crashed to move the economy forward.
He added: “The rates are useful to manage inflation but they are not good for industrialisation. What the economy requires at this stage is industrialisation.
“To propel industrialisation, no serious producer can borrow at between 22 per cent and 23 per cent interest. We are looking forward to a CBN that will return interest rate to a single digit.
“Besides, Sanusi tried to innovate development financing through special intervention funds. Emefiele should consolidate on those special intervention funds, especially those for automobile, aviation, textile and SMEs (small and medium-scale enterprises).”
Professor Pat Utomi, an economic expert, urged Emefiele to build a strong CBN institution, rather than building himself up as a strong man, like Lamido, whom he described as a lone ranger.
The biggest challenge for Emefiele is how to undo “the damage done by Sanusi that will require courage to redress. The levels of abuse by Sanusi are unbelievable. Nigerians will eventually hear all of them,” Utomi stated.
“I know many of such abuses. And when Nigerians hear all of them, they will be shocked.
Utomi also wants Emefiele to refocus CBN on the business of central banking. “Right now, the CBN has become school development officer of Nigeria, donating money to every secondary school and university out of the whims of political orientation of his predecessor. The CBN has to know that this is wrong.”
He lamented that Sanusi created the impression that Nigerian bankers are all crooks and implored Emefiele to change that impression because confidence is the essence of banking. “If you tell the world that all your bankers are criminals, how will they deal with crooks?”
Besides, the new CBN boss should stop “the over regulation of banks which is stifling the industry. Banks cannot breathe without thinking of the CBN. The general mood in the industry is that banking has been made so onerous with so many regulations.
“You turn here it is the CBN, you turn the other way it is the CBN. The strategies of banks are constrained. So Emefiele has to find a way of returning banks to their glory when banking was exciting and wealth was being created.”
According to Utomi, the problem is that unfortunately Nigeria is entering into election year when ordinarily, the Central Bank will want to defend the naira.
But it is not a wise thing to continue to defend the currency without the sense of a limit, he insisted.
“If you defend so much, we get the experience that we had in 1980s when they defended and defended. Eventually when the naira crashed, the trauma was too much for investors to bear.
“There are a lot of uncertainties concerning the environment. That uncertainty is leading to capital flight. It often happens that towards elections many people are usually afraid of what the outcome will be. They begin to take positions outside of the currency to protect themselves abroad.
“That is a challenge obviously that puts pressure on the local currency.
Utomi maintained that devaluation of the naira depends on what the CBN is doing. “If you are on the frontier, you won’t feel the impact. You walk out quite better. But if you are import dependent, obviously the cost of your goods will go up significantly in the local market, and your market share and size will take a hit.”
Utomi lamented that the best talents in the banking industry “have been destroyed. About 200 quality banks have been ruined over the past 20 years for real and imagined offences, many of them more imagined than real as a result of excessive focus on power and strongman, self-driven egomania syndrome.
“Human beings just crushed them so that they could get what they want. Some of what they called banking reforms was just a stealing of other people’s strategy. They are open robbery and all of that.”
He said instead of going a methodic way to correct problems and move forward, the abuse of power led to the crippling of institutions and persons. “As we go back to the late Sani Abacha-era reforms in the banking industry, the best players were hounded and put out of the industry on propped up charges.
“The people who carried out the reforms and the persecutors of other people, the Abachas and co, we know today what they did. Most of those professional bankers did not do even one millionth of what the Abacha people did; that is if they did anything at all. Because we know that some did absolutely nothing at all.”
Utomi urged Emefiele to learn to build up institutional memory from those experiences, mindful that there is something wrong in the system, he would clean it out, save the system and keep moving.
“We can clean it out and move on without the abuse of power and crippling of the opportunities of others and some of the things that people will find tomorrow that those who did those things did much worse.”
All the stakeholders warned Emefiele to learn from the mistakes of his predecessors by developing autonomous approach to issues and not throw his hat into the ring on controversial policies that gave the CBN away as partisan.