Emefiele vs the naysayers



There seems to be a corruption cartel that is angry with the Governor of the Central Bank (CBN), Godwin Emefiele. The cartel members who have apparently been hurt by the policies of the Central Bank are fighting back. They are calling for the sack of the governor, and apparently have some shadowy hirelings who are willing and ready to do the job of pushing their agenda. The Governor of Edo State, Adams Oshiomhole, a man who pulls no punches when he means to fight, is taking them on. He says those who are calling for Emefiele’s removal are “facebook manipulators and palm wine drinkers.” He says these fellows are those “who have been feeding fat on our common patrimony and manipulating the exchange rate, moving money across borders and taking advantage of electronic money transfers.”

Someone else has spoken in the same vein, removing the veil from the faces of these naysayers. The President of the Coalition of Civil Society Groups in Nigeria, Etuk Bassey Williams, says the policies of the CBN are protecting ordinary Nigerians from the destructive, capitalistic instincts of a few plutocrats and bourgeoisies. “Bassey says CBN’s policies have terminated the rent-seeking ability of many economic parasites and saboteurs.” He calls them “a sponsored group of anarchists.”

It is a fact that the recent policies of the CBN especially on foreign exchange as well as the list of 41 items including tooth pick that are denied foreign exchange from the official window have hit some rent seekers and round-trippers hard where it matters: their pockets. It is, therefore, no surprise if they should decide to take the fight to Emefiele. We shall return to this shortly. Other alleged sins of the governor are that he employed a number of people, about 900, without observing the federal character guidelines. I understand that the Federal Character Commission gave the Bank a waiver to employ without advertising the positions because of the sense of urgency involved in the recruitment. In any case, you can’t use one round of employment to determine whether federal character requirements have been met in an organisation that has been running for years with many staff working. Besides, availability of manpower is not evenly distributed among all the states of the federation because some people prefer the convenience of working in their home states than at the centre where they can be transferred from time to time, and from place to place. Also, for all kinds of reasons federal character in any institution is always imperfect. No matter how hard you try there will always be states that meet more than the 3 per cent upper limit or those that fail to reach the 2.5 per cent lower limit. It never quite works faultlessly like a well-oiled Swiss watch.

Another alleged sin of the governor is that he paid monies to Sambo Dasuki, the former National Security Adviser, who is now being grilled by the anti-graft agencies. This seems ridiculous to me. Is there any bank that can lawfully refuse to pay a customer with a cheque appropriately signed by the authorised signatory or approving authority. It is most unlikely that any Central Bank governor could fail to pay a customer when the President has approved or authorised payment. The buck, afterall, stops at the President’s desk, not the CBN governor’s desk. Failure to pay would amount to insubordination or dereliction of duty and either could attract severe sanctions.

The most grievous of Emefiele’s alleged sins must be the dollar doctrine. He listed 41 items of import that would not attract foreign exchange from the official window. Among these former beneficiaries of official foreign exchange must be some manufacturers, some importers of goods that are available or have close substitutes in Nigeria, and some who merely use the acquired foreign exchange for round tripping. They buy at the official rate and sell at a huge profit in the parallel market. Blocking that lucrative avenue is the equivalent of removing fish from their mouths and putting stone in their places. They are angry, very, very angry. That is why Emefiele is the enemy. They would prefer Nigeria to continue to bleed while they bloom. The Bureau de Change operators bought forex from the CBN at the official rate and sold at the parallel market at ridiculously high margins. They, too, are angry, very, very angry because they have been told to source for forex from the autonomous market while the official forex is to be sold to end users.

The genesis of this “wahala” was the dramatic drop in the price of crude oil since June 2014. The takings from crude exports were so low that it exposed Nigeria’s vulnerability as a largely mono-product economy which on the other hand is heavily import-dependent. But even before June 2014 the management of our reserves was poor, to put it mildly. For Emefiele the assumption of office in June 2014 was an imperfect timing because that coincided with the beginning of the difficult era of low forex and low reserves management as well as high import bill.

To manage the value of the naira in a somewhat realistic manner Emefiele has devalued the naira twice. The CBN currently believes that the dollar is worth ₦199 while some Western economists think it should be around ₦250 or even higher. The idea they claim, is to be sure of the true value of their investment in Nigeria. Others also think if President Muhammadu Buhari wants fresh investment in Nigeria devaluation is the answer. He has repeatedly said that devaluing the naira is not in Nigeria’s interest.

However, the pressure is still on. America has indicated that the issue will be discussed as Buhari comes to America for a nuclear summit. The other day, the U.S. Assistant Secretary of State for Africa, Linda Thomas-Greenfield, said at the U.S. Institute of Peace that Nigeria should ensure that the value of the naira was more realistic than it is now. She warned that a rigid exchange rate, capital controls and import bans could undermine Buhari’s efforts to expand economic growth and fight corruption.”

I hope Buhari will resist the pressure to devalue the naira further. Right now the prices of many items including food are weighed against the value of the dollar at the parallel market. A few days ago, I wanted to buy a bunch of bananas that had eight fingers. The lady seller put it at ₦800. I asked her why. She said the price of petrol has gone up and the cost of a dollar is high. I know that a lot of bananas are planted in the West Indies but I knew she didn’t bring her bananas from there, whether by road or by air and she didn’t buy them in dollars. So the naira has already been severely devalued by the banana seller and the sellers of other items. If there is another official devaluation the naira will be the equivalent of toilet paper.

Linda Thomas-Greenfield is advising Nigeria not to curb or ban imports. How realistic is this? Nigeria makes only a third of what it made two years ago when it was importing everything under the sun from macaroni to mangoes, from toothbrush to tooth pick. Even if it wants to continue in that wayward manner it can’t afford it. Besides, every country protects its infant or adult industries by banning certain imports. The United States bans imported milk and sugar and places high tariffs on T shirts, canvass tennis shoes, pick-up trucks, and steel. Since 2008, America has put in place a comprehensive Buy America policy so as to discourage the consumption of goods from other countries.

The European Union states have imposed anti-dumping taxes to fight the import of wire, iron, steel pipes and candles from China. Russia prohibits the import of vegetables, fruits and meat from the United States, European Union, Canada, Norway and Australia. China, the world’s second biggest economy, has deployed a series of non-tariff measures to curb imports of corn, cotton, dried grains. By year 2013, China had 73 animal and plant barriers to shut out products from several countries. If the rich and developed countries can take these wide ranging measures to protect their economies why shouldn’t Nigeria?

Our salvation is within Nigeria, not outside. On December 8, I had written a column on this page titled “Highway to Self Reliance”. What I said then bears repetition. We import food when we have ample arable land. We must grow what we eat and eat what we grow. We import fish when we have water. We must learn to fish and eat the fishes we catch, not the rotten ones imported. We import tooth pick yet we have shrubs. We must learn to make tooth pick from our vast forest resources. We have crude oil yet we import finished petroleum products. We must bend down and make the country self-sufficient in petroleum products. It is good for our economy as well as for our security.

I thought Buhari would make a self-reliance statement with this year’s budget by telling us to import less and export more, by telling us to grow what we eat and eat what we grow, by telling manufacturers to source for raw materials from within, by imposing high taxes on luxury goods, by telling people to return to their farms and till the soil, by encouraging people to buy made in Nigeria goods, by telling us to return to the path of sanity in the way we live. Unfortunately he didn’t.

Mr. Emefiele’s only crime is that he put together policies which if faithfully implemented will lay the building blocks for a better Nigeria. That is why the cranks want him fired. I am sure Buhari knows that.

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  • Folake Vaughn

    I regularly read Mr Ekpu’s articles. They are solid, serious and unbiased. Not this one. Those opposing Mr Emefiele’s fixed “patriotic” exchange rate are not all manipulators, rent seekers, opportunists and plutocrats. (Did I leave out any epithet?) Keeping the exchange rate at an artificially low value may appear a measure to protect against inflation, and, therefore, a way to protect low-income earners (the absolute majority of Nigerians). In practice, the measure only leads to a veiled import licence regime, giving the officials involved in the CBN and commercial banks the power to decide who gets the little forex. And they will not let this power go for free, as newspapers have been reporting. Importers will have to pay a “commission” of 30% or more, that will go to the pockets of the actual rent seekers: the CBN officials!
    Besides, keeping the exchange rate artificially high is the safest way to ensure that no foreign investor will bring a single dollar into a country which will allow him to bring capital but not repatriate the profits, unless he goes through the parallel market at a very high rate.
    Import substitution is the recipe advocated by Emefiele. And does he expect the country to produce in a few months all that we have not produced since we are an independent nation? Haba! Who will set these factories? Foreign investors, I presume, since Nigerians don’t have the know how. And foreign investors cannot come with the current regime of “allocation” of forex.
    Please, Sir, leave Economics out of your articles. You can cause a lot of long-term damage with your unorthodox opinions, as you are a highly regarded personality. Mr Emefiele should urgently be replaced by an economist who understands the basics of how the economy works. He is not.

  • Kingsley

    Emefiele is not the issue! whether or not he is fired is irrelevant! the major issue is on the price of oil @ the int’l market and the urgent need for us all to change our taste for foreign products in place of locally made products