When on the 3rd of June, 2014 Mr. Godwin Emefiele formally resumes as the CBN Governor, he will be confronted with several nagging issues to resolve very quickly if he is to succeed as CBN governor. Many of the issues are like landmines which require both native intelligence and God’s guidance to handle.
He must as a matter of urgency attempt to restore both local and foreign confidence in the bank. Many Nigerians lost confidence in the bank as a result of the controversial banking reform in which the CBN told investors it was out to protect depositors and investors can go to hell. Local and foreign investors got worried especially when some unguarded utterances led to the erosion of capital in the nation’s stock market. Many investors have not forgotten so soon.
In recent times, the lack of proper coordination of facts and figures that came out of the apex bank simply ridiculed the institution. It is now evident that the figures quoted by the former CBN governor were never compiled by the CBN; they were more political than real. The CBN has never faced such turbulence in recent times. For whatever it will take, Emefiele must ensure that every of his utterances is to assure both local and foreign investors just as well as depositors. The Governor must ensure that accurate data are fed to the public. All departments of the apex bank must cross-check data before they are issued out.
Investors in Nigeria were not surprised when former central bank governor was suspended in February. Before the suspension, he had succeeded in polarizing the bank. He distanced the bank from government by alleging that $49.8 billion was un-remitted and later changed it to $10 before making it up to $20 billion. This pitched the CBN against the government and many Nigerians doubted the credibility of data coming out of the CBN. This lack of trust between the apex bank and the Federal Government has to be bridged through an open and transparent dealing between the bank and the government.
Godwin Emefiele is a very reserved and conservative person.
His style must be open and transparent. He should steer the bank away from the past controversies which were mainly of political nature. The new CBN governor must draw a distinction between the core mandate of the CBN and what is political. He should take his cue from Joseph Sanusi, whose reform of the banking system was profound but was not conducted through Press conferences but through a fair and firm decision making process. CBN had in the past maintained a professional posture which allowed it to act professionally without dabbling into politics. What Emefiele should do is ensure that the CBN top and middle management are highly professionalized. He must forge a close tier with the Deputy Governors and policy coming from each must be properly scrutinized. He should carry along the management staff of the bank in decision-making and avoid the temptation of doing it alone.
One area that may prove difficult for the new governor is staff audit. The CBN was in the past manned by competent and qualified economists and accountants who could face up to professionals in the banking industry. The Research and Banking Supervision unit of the apex bank was very thorough in recruitment and staffing. This is not the case today. In the last five years, the morale of many professionals in the bank has been dampened by appointments of persons from outside the bank that were neither qualified nor competent to head units. Such individuals, political appointees most of whom are either sons or daughters of political heavy weights or surrogates of former governor, are now in top positions in the bank.
These appointments were made without complying with CBN due process and most unfortunately, those appointed were made to head units they are not qualified to superintend over. This brought a lot of discontent and disaffection in the apex bank. The new governor is certainly inheriting a baggage of discontented staff whose loyalty and performance will depend on how he will quickly address this anomaly. It will be a tough way to go but for him to succeed, he must act fast and timely to raise the morale of the CBN staff.
Mr. Emefiele’s task also will be to convince investors and bankers that he is his own man, not just another political appointee. That Mr. Emefiele is a respected figure in Nigerian banking will help. He became Zenith’s chief executive in 2010, having been deputy head from 2001. Under him, the bank has performed strongly. Its 2013 pre-tax profit of $680m was the biggest ever made by a Nigerian bank and amounted to a high return on equity of 23 per cent.
Zenith from where Emefiele is coming has a reputation for investing heavily in technology and good customer service compared with rivals. The expectation is that Mr. Emefiele will carry this culture of investing heavily in technology and good customer service to CBN. He should couple this with staff training and retraining.
He must see his role as a manager of the economy and not a crusader. He should ensure that monetary and fiscal policies are in harmony to ensure proper management of the economy. He should develop strategies that would tap into the idle cash in the informal sector by deliberately encouraging the formalization of the informal sector. The CBN under Emefiele should not be one that pursues low inflation at the expense of job creation. It is when there is availability of credit that investors can borrow to create wealth and job opportunities. He should make CBN policies to be focused on development banking that will encourage small and medium enterprises to grow the economy.
Emefiele must not see the independence of the CBN as that of a sovereign within a sovereign state. He should learn to make the CBN a banker to the government and from time to time as it was the practice of the apex bank, offer professional advice to the President. The CBN must be insulated from political influence.
Mr. Emefiele must know from the very beginning that the world will scrutinise his early actions to get a sense of whether the central bank’s policies will change under his leadership. This will be especially important in the run up to presidential elections in 2015, with the likelihood of extra government spending putting the naira under pressure.
Mr. Emefiele should ensure that the central bank coordinates its policies closely with fiscal authorities. Notwithstanding CBN’s independence, it must walk in line with government policy. Monetary and fiscal policies must walk hand in hand for the growth of the economy.
