Financial crisis and increased responsibility for financial stability have focused attention on governance in central banking. Achieving effective oversight of specialized technical functions – without undermining institutional independence – demands the right people, processes and culture. This is why countries always ensure that their best of the best is picked to man their central bank.
Emefiele’s success or otherwise will depend on the extent to which he stays focused on the mandate of the Central Bank of Nigeria (CBN) which is derived from the 1958 Act of Parliament, as amended in 1991, 1993,1997,1998,1999 and 2007. The Act charges the Bank with the overall control and administration of the monetary and financial sector policies of the Federal Government. The objects of the Bank are to ensure monetary and price stability; issue legal tender currency in Nigeria; maintain external reserves to safeguard the international value of the legal tender currency; promote a sound financial system in Nigeria; and act as banker to the banks and to the Federal Government, as well as provide economic and financial advice to the Federal Government.
As Godwin Emefiele assumes duties as the 11th governor of the CBN, he is expected to run with the torch which was lit by the first and only expatriate governor of the Bank, Mr. Roy Pentelow Fenton, who served from August, 1958, to August, 1963. Emefiele is expected first, to be his own man. However, there are indications that the developments that led to the altercations leading to the suspension of Sanusi Lamido Sanusi may hunt him, especially in his relationship with the Presidency. He might want to build a good relationship with the President so as to move away from the circumstances that led to the non-renewal of the tenure of Chukwuma Soludo by President Yar ‘Adua, and the sacking of Sanusi Lamido Sanusi by President Jonathan.
These circumstances may force him to pander to the powers that be, keeping quiet when he should talk, looking the other way when he should step his foot down. Emefiele should be his own man. Not in a confrontational sort of way, but in confidently seeing to it that the apex bank stays the course and garners the respect of the market. His new office gives him the leverage to ensure strict supervision of the nation’s banking industry, even if to reassure both local and foreign investors and he should use it. Emefiele must distance himself from politics; he should not be seen to be hobnobbing with any political association, religious leaders or ethnic associations.
Moreso, his relationship with his former colleagues must be professional at all times. This is an area the two former governors of the bank failed woefully. Sanusi Lamido Sanusi used to criticize Soludo for always being in the midst of the same bankers he was expected to regulate. But when he became governor, he took his own to another level! It is such relationship that gave rise to talks about favouritism and cronyism in the system. Thus Emefiele should steer clear from such vices as cronyism, nepotism and crankiness.
He has an urgent mandate to keep the inflation rate, which is currently put at 7.9 percent in April, within the 6 percent to 9 percent target band. Inflation is a form of regressive taxation that hits the poor hardest. It also increases uncertainty, which is a key factor that contributes to high real interest rates. Moreover, reducing inflation helps create the conditions needed for the development of deeper financial markets.
He should continue with most of the policies that Sanusi put in place, most especially the cashless policy, which needs to be deepened; following this is the Biometric solution project which aims at building a central database of bank customers in the country. I see in Emefiele a return to the traditional conservative mien most central bankers exhibit. This reminds me of Joseph Sanusi, and Ola Vincent. There is also the fear that being a banker, Emefiele may be rigid in his operations focusing only on financial variables and financial markets instead of broadening its view to focus on the economy, on real economic growth, spending growth and household spending consumption, which Sanusi though a banker did his best to incorporate.
While I want someone who talks less, someone does not court the media, someone who may not exhibit the superstar style of Soludo or the rockstar carriage of a Sanusi, I still want a Central Bank governor that appreciates the fact that he is Nigeria’s ambassador in international financial gathering or conferences. Someone who carries himself with pride, quite articulate and can stand his ground anywhere. Someone who can easily mingle with his US,UK,EU,Brazil, China,and Indian counterparts without a sense of inadequacy. That was one thing about Soludo and Sanusi that I loved so much, confidence.
As Godwin Emefiele takes over the reins at the Central Bank of Nigeria, we wish him the best and warn that he must not lose sight of the enormity of the responsibility on his shoulders thus the need to remain focused at all times.
By Kelechi Deca
