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The three major economic sins of Godwin Emefiele

In the current imbroglio about Mr Godwin Emefiele and his eight-year rule at the Central Bank of Nigeria (CBN), three major things indict him as…

In the current imbroglio about Mr Godwin Emefiele and his eight-year rule at the Central Bank of Nigeria (CBN), three major things indict him as a CBN governor who neglected his primary assignment at the apex bank.  

Naira-glutting the economy – no control over inflation 

One critical way monetary authorities control inflation is by looking at a nation’s legal tender (in our own case, the naira), not just as a store of value, but also an economic product which can be traded, and which is also subject to the forces of demand and supply. Mr Godwin Emefiele must have missed this point. 

When Emefiele came in 2014, the naira issued by the CBN, and believed to have been in economic circulation, was less than N1.5trn. In fact, in December, 2015, just a little more than a year into Emefiele’s governorship of the CBN, the naira was N1.46trn in circulation. 

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Seven years later, in September, 2022, this amount more than doubled to N3.23trn! What were the economic infrastructure being funded by Emefiele’s astronomical supply of the naira to the economy? None at all! There was no manufacturing, no additional employment, and there was no salary and wage increase which required that reckless dole out of the naira. 

By the law of economic demand and supply, it seems that Mr Emefiele only wanted to deliberately create an artificial inflation, which he did! Too much Emefiele’s money chasing too few Nigerian goods, and we landed in Emefielation – which should be the most recent type of inflation. This was a fatal economic accident, albeit a deliberate or a mediocre one! Was this deliberately planned and executed to instigate the citizenry against the government?  

Now, to worsen the situation, and then lay credence to a deliberate plan to ditch the economy, N2.73trn of Emefiele’s N3.23trn in circulation was outside the banking system! 84.52 per cent of Emefiele’s supplied money was not under his control! So, how did he control inflation through the Monetary Policy Committee? He would “reduce” the money “in circulation” by, say, N300bn, by pretending to raise interest rate by one per cent, and those holding N2.73trn cash outside the banking system would circumvent his move by pumping N500bn into the economy! So, it was a lie that the Monetary Policy Committee actions were in charge of the inflation steering wheel.  

And, how did the CBN’s intelligence and surveillance miss the fact that N2.73trn of its N3.23trn supplied money was outside the banking system? No economic administrator would ever believe this white lie! Mr. Emefiele knew this fact of par money circulation, and a certain structure of the CBN administration must have known it. If they didn’t know, then this is good enough ground to sack them immediately.  

Molesting and strangulating the GDP  

When Mr Godwin Emefiele arrived the CBN in 2014, our GDP for that year was $546.68bn. The previous year, 2013, it was $508.69bn. To date, these were the two highest GDPs attained by Nigeria. Immediately Mr Emefiele settled down on the pedals of the CBN, he seemed to have pulled the choke lever against the economy. 2015, our GDP tumbled down to $486.80bn, and we lost $59.88bn, or 10.95 per cent.  

This GDP tumble continued in 2016, to $404.65bn (-$142.03bn, or 25.98 per cent decline from 2014 highest); then, $375.75bn, in 2017 (-$170.93, or 31.26 decline from 2014). It is noteworthy here that our GDP in 2005 was $176.13bn, which means we lost the whole of our 2005 economy in just one year of 2017!  

Now, while waiting for the 2022 GDP figure, the 2021 GDP figure stands at $440.78bn – still a far cry (23.03 per cent down side) from pre-Emefiele’s $546.68bn of 2014. 

Our next CBN governor has a rocket science herculean task to return us to the glory we had then cursed. It is worth noting that while an administrative recession has not been formally mentioned, yet we have been going through technical recessions all through the Emefiele years.  

 The over-hyped forex  

The naira to foreign currencies exchange rates has been so much over-hyped, making their astronomical hike look more monstrous than the naira glut and the GDP strangulation. Here, the naira to the dollar exchange rate is more hyped, perhaps because of the dollar’s financial elegance. It is economically imperative to note that the financial elegance of the dollar is globally more pronounced than its economic weight. For instance, the dollar, this January, has a debt weight on it of $31.4trn. In the same dollar terms, the debt on the naira is less than $180bn (about 0.5 per cent of the debt weight on the dollar). Even in per capita terms, the debt on the naira is less than $900 per capita, while the dollar is groaning under some $94,000 debt per capita.  

Actually, the dollar is a diplomatic currency, competing globally with certain economic and financial currencies. So, the fact of the ballooning exchange rate of the dollar against the naira has little impact on the actual productive side of Nigeria’s economy, perhaps affecting the little importation of equipment and machines for production. The non-productive side of our economy, the elitist consumption side, is what Emefiele has idolised with the so-called fall of the naira. There is so much cry and hue there.  

So, overall, the banking, financial and economic prowess of Emefiele have all been called to question. So, is his integrity, also, called to question, most especially if he cannot prove that our dwindling economic fortunes are deliberate, or mediocre. Remember that Emefiele’s battle with the DSS, over allegations of state crimes are also major dents on his person and integrity. It is painfully nauseating that Mr Emefiele has refused to resign, and that President Muhammadu Buhari has yet to relieve him. 


Dahiru wrote from Area 11, Garki, Abuja [email protected] 


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