I agree with Robert Zelwin Aliber, (the celebrated professor emeritus of International Economics and Finance at the University of Chicago) that “Central Bankers Read Election Returns, Not Balance Sheets’. I agree with him, perhaps no less than the 11th and newly reappointed Governor of the CBN, Mr Godwin Emefiele.
Yours comradely shares the tested and verifiable perspective that Central Banking worldwide can be likened to a good (economic) driver, which must keep an eye on the road and maintain steady hands on the wheel for a good (economic) ride.
Emefiele’s CBN from the standpoint of monetary policy and development financing commendably endeared the hearts of some critical voters in recent polls in favour of the re-election of President Muhammadu Buhari as the 4th democratically elected President in this 20-year sustained democratic process.
Godwin Emefiele, a former Group Managing Director of Zenith Bank, and multiple degrees holder in Finance and Insurance was first appointed on June 2, 2014 by then President Goodluck Jonathan.
As a doubter of the capacity and independence of a bank player/operator turned regulator, I had expressed “let’s wait-and-see” attitude to his appointment as much as I did when Sanusi Lamido Sanusi (who also came from First Bank) was appointed as CBN Governor by the then Late President Musa Yar Adua.
Five years after eventful activist autonomous central banking, I bear witness that Emefiele is a Governor with an eye on the bigger picture of the economy, balancing the bank mandate with the objectives of national economy. Countries preoccupied with growth and development issues use their Central Banks to keep the economy on course through activist macro economics with respect to pricing, (inflation), exchange rates, interest rates, capacity utilisation, employment, external reserves building and above all, development financing. debt management.
South Africa’s Federal Reserve and its remarkable performance with respect to macroeconomics are central to the successive victories of ANC government since 1994 confirming the validity of the received wisdom that the Bank of last resort anywhere works towards growth and development, capacity utilization and employment creation.
In the last five years, Emefiele’s CBN has recorded significant successes with respect to price and financial stability and macro economics in general. As Emefiele unfolds the vision for the next five year tenure, the challenge is to consolidate on the globally acknowledged monetary policies and be open to further engagement with all relevant stakeholders.
The CBN within the context of its enabling Act that guarantees its autonomy must continue to maintain sound financial structure, promote monetary stability, safeguard the value of naira and stable exchange rate, prove a financial adviser to the federal government in the areas of price and exchange rate management, development financing, building foreign reserves and employment creation.
Remarkably on the Exchange rate management Emefiele has through varying creative interventionist measures that include flexible exchange rates (in interbank market) in 2016 to multiple windows FX management for whole sale, invisible, small and medium enterprises (SME) and Investors/Exporters windows maintained stability.
The positive result of exchange rate stability in the range of N305/$ in the inter bank market and N360/$ in the BDC (Bureau De Change) segment must be sustained and improved upon. The most remarkable outcome is FX availability, a departure from the scarcity of the past. In the next five years, CBN must consolidate of the exchange rate availability and stability so as to allow for planning and investment decisions.
CBN must resist the pressures to return to “staggering and undulating foreign exchange rate in relation to the naira”. Certainly the CBN must sustain the measures that “stabilise the exchange rate amidst escalated pressures from speculators, bettors, round-trippers and rent-seekers.”
CBN must also continue the efforts to build the external reserves which currently stand at $47.3 billions compared to the all time low of $22 billions in 2016. The point cannot be overstated that the CBN’s restriction on 43 items (that include textiles) from accessing foreign exchange (forex) had impacted positively on manufacturing and real sector growth through import substitution and employment generation.
The policy objectives, such as encouraging local production of the items and boosting local industries suffocated by the importation of competing products, are being realized. I agree with the governor that “, it is our collective duty to ensure that the potential and prospects of the economy are optimally realized.
The ongoing economic recovery requires the joint efforts and wise counsel of everyone, if we must take giant strides forward”.
This means beyond the creative monetary measures of the CBN, the fiscal authorities with respect to electricity supply, fighting smuggling and dumping (customs department) (CBN has also commendably denied smugglers FX), trade policies must compliment with new activist measures that would boost domestic manufacturing.
President Buhari in his June 12 inaugural address announced ambitious plan to create 100 million jobs in a decade. With robust monetary policy and sustained development financing and complementary fiscal measures that include buying what we produce, the objective of full employment is obviously achievable.
All said the new vision of the Mr Emefiele must also be within the context of the broad national agenda contained in the Economic Recovery and Growth Plan and of course the Sustainable Development Goals 17 2030. Which again underscores an urgent call for a new partnership for growth and development of Nigeria.