Emefiele is not the problem

The problem with Central Bank are loopholes created to tempt the President and his Governor appointee, argues Columnist Ogbuagu Anikwe.

It is my contention that there are no guardrails in the structure and operation of the Central Bank of Nigeria capable of keeping the bank and its governor on the straight and narrow. At best, such guardrails come with many loopholes conveniently created by the laws setting up and regulating its operations.

I pity those either crucifying or defending the disgraced Governor of the Central Bank, Mr. Godwin Emefiele. I am indifferent for one reason – history teaches me that succeeding CBN governors have been as clean and ethical as the presidents that appointed them, if you get my meaning. The fault is the system that they (the President and the Governor) found themselves. After reading three persons who either condemned or praised Emefiele, I became further convinced to sit on the fence.

Before looking into what those who condemn and those who praise have to say, here is what I think of the man. Emefiele neither acted like a saint in the performance of his duties nor did he shirk his statutory duty in any way that I could see. In other words, there is extraordinarily little in the rules – specifically, the CBN Act – that Emefiele violated in the performance of his duties. This is why I therefore neither condemn nor praise his performance in office,, the ongoing security investigation, and the associated media trial.

Reno Omokri is the loudest voice in praise of Emefiele. I often find it difficult to agree with him conclusions on public policy matters. I read what he writes for two reasons. He researches his topic and offers appropriate diagnosis of a problem at hand. His conclusions are often so off the mark, as exemplified by his recent defence of Mr. Emefiele.  Omokri correctly reminded us that “no CBN Governor in the last thirty years has left office unscathed.” He insinuated that Emefiele was different as he was the only one that earned a second tenure, remarkable because he was appointed by different presidents from different political parties. On the strength of this, Omokri concluded that Emefiele is undergoing media trial and security harassment because he is an Igbo who crossed the path of two Yoruba political potentates.

As usual, Omokri’s prescriptions were dangerous and cunning,. Yes, it is a fact that succeeding CBN Governors since Sanni Abacha, including Paul Ogwuma, Joseph Sanusi, Charles Soludo, and Sanusi Lamido Sanusi ended with a single term of office, and ignominiously. It is also true that Emefiele was reappointed, incredibly by a succeeding president from a different political party. But Omokri pulled the Igbo angle out of the hat and proffered it as a reason for Emefiele’s current travails. This conclusion is as preposterous as the DSS claim that the former CBN Governor was consorting with terrorists and funding the separatist group IPOB. But the cunning Omokri knew what he was doing – throwing a bone to Igbo ethnic irredentists. And, predictably, they are all over the place shouting marginalization to defend someone who never openly or indirectly identified as Igbo.

Omokri was also on a journey to activate another inter-ethic fight between the Yoruba and the Igbo, and intra-ethnic among the Yoruba themselves, for the benefit of his current principal. He identified the two powerful politicians that Emefiele offended as the current president and the immediate past vice president. According to him, Emefiele’s troubles under a Tinubu Presidency relates to Naira redesign policy which was allegedly executed to prevent Mr. Tinubu from using bullion vans to buy the presidency from the voters. As for Prof. Osinbajo, his spokesperson attacked Emefiele for using another policy – the ban on cryptocurrencies – to injure his plan to mop up funds for his failed presidential bid, Omokri claimed.

Significantly, the former Vice President’s spokesperson, Laolu Akande, publicly crucified Emefiele, but not for the reason advanced by Omokri. Instead, Akande focused on alleged corruption promoted by the CBN under Emefiele through the dual exchange rate regime that he inherited from his predecessors. This was a point of agreement from another loud voice against Emefiele. In agreeing with Akande, Chidi Odinkalu, a professor of law and former head of Nigeria’s Human Rights Commission equally marshalled a potpourri of other accusations against the disgraced banker. He began with sins committed by the governor before he was appointed and ended up by agreeing with a Premium Times editorial that concluded that Emefiele will be remembered “for having willfully ‘shredded’ the guardrails in the CBN Act.”

Bingo!

What are these guardrails and how did Emefiele breach them? It is my contention that there are no guardrails in the structure and operation of the Central Bank of Nigeria capable of keeping the bank and its governor on the straight and narrow. At best, such guardrails come with many loopholes conveniently created by the laws setting up and regulating its operations. Unlike the UK, these loopholes gave rise to direct and indirect controls by the presidency. They gave the Presidency such powers that effectively converts the CBN appointee into a personal banker and cashier for the President. The laws also allow the CBN to keep and manage its excessive earnings, a situation that encouraged succeeding Governors to dispense funds to businesses, groups and associations like drunken sailors. There is nothing in the CBN Act that empowers the governor to act independently, unlike the Bank of England after which it was modeled.

I looked up the governance structure of both the UK and the US Central Banks and found that they do not answer to the Executive Branch but to their Parliaments. They also have intricate semi-autonomous treasury agencies that produce and print money, different from their Central Banks whose jobs are to monitor and control money supply and manage the cost of funds to control inflation and stimulate the economy. Our own Governor reports to the President and may casually detail any director to answer to a parliamentary summons. The US Reserve Banks and the Bank of England operate like commercial organisations and return their net earnings to the Treasury, which is domiciled in their Ministries of Finance equivalent.

What does the CBN do with its excessive earnings? The media reported that the Central Bank used N58.618 billion to print 2.518 billion Naira notes valued at N1.1 trillion in 2020. The public concluded that the printing cost was too high. However, if this information is correct, the average cost of producing one currency note would be N23.28 which is about 10 percent of the average cost of the notes. We forgot that commercial banks would still buy the currency notes at their face value from the CBN which will end up raking in over N1.0 trillion from the transactions. This is in addition to other fees and dividends that the government banker earns from investments, consultancies, and regulatory operations. CBN swims in money, it seems.

A unique feature of both US and UK system is that each year, their central banks (Bank of England and the 12 Federal Reserves) transfer their net earnings to the government treasury. I have often wondered what the Central Bank of Nigeria does with its excessive net earnings. Does this explain why succeeding Central Bank Governors behave like drunken sailors, doling out billions of Naira each year for whimsical projects they kickstart in the name of managing inflation and stimulating the economy? And does it explain why each of them, since Sanni Abacha, stand accused of financial recklessness and impropriety? What is in our laws that allow the Central Bank Governor to be a law unto himself, often in cahoots with the President that appointed them?

Paul Ogwuma was accused of corruption and financial recklessness. OBJ dismissed Joseph Sanusi for “financial recklessness.” Soludo was similarly accused of financial recklessness. Sanusi Lamido Sanusi publicly displayed his own brand of recklessness as he doled out hundreds of millions of Naira to sundry groups and associations. Emefiele is merely toeing the line of his predecessors, the same way that anyone appointed by the current president will be similarly accused in future. I am not interested in Emefiele as much as I am interested in proper restructuring of the Nigerian banking system to make the CBN more autonomous and accountable. It seems to me that the trouble is not with Emefiele but with a system that proves too tempting for the Governor and the President.