In the current imbroglio about Mr Godwin Emefiele and his 8-year rule of the Central Bank of Nigeria, three major things indict him as a CBN governor who neglected his primary assignment at the apex bank.
1. 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 Central Bank of Nigeria (CBN), and believed to have been in economic circulation, was less than one and half trillion naira. In fact, in December 2015, just above a year into Emefiele’s governorship of the CBN, the Naira was N1.46 trillion in circulation.
Seven years later, in September 2022, this amount more than doubled to N3.23trn! What were the economic infrastructures 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 its sitting 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 percent 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 1 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.
2. Molesting and strangulating the GDP
When Mr Godwin Emefiele arrived the Central Bank of Nigeria, 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 herculean task of returning us to the glory we once had. It is worth noting that while an administrative recession has not been formally mentioned, we have been going through technical recessions all through the Emefiele years.
3. The Over-Hyped Forex
The Naira to foreign currencies exchange rates have been over-hyped, making their astronomical hike look more monstrous than the Naira glut and the GDP strangulation. Here, the Naira to US Dollar exchange rate is more hyped, perhaps because of the US Dollar’s financial elegance. It is economically imperative to note that the financial elegance of the US Dollar is globally more pronounced than its economic weight. For instance, the US Dollar, this January 2023, has a debt weight on it of $31.4trn. In the same US$ terms, the debt on the Naira is less than $180bn (about 0.5 per cent of the debt weight on the US$). Even in per capita terms, the debt on the Naira is less than $900 per capita, while the US$ is groaning under some $94,000 debt per capita.
Actually, the US$ is a diplomatic currency, competing globally with certain economic and financial currencies. So, the fact of the ballooning exchange rate of the US$ 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 Mr Godwin Emefiele have all been called to question. So is his integrity, also, called to question, 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 of his job.
Jameel Muhammad Dahiru wrote from Area 11, Garki, Abuja