Thursday, April 10, 2014

Tasks before the new CBN Governor

On Wednesday, March 26, 2014, Nigeria’s Senate confirmed the nomination of Mr. Godwin Emefiele as the Nigeria’s Central Bank Governor Designee. The consummate banker who was head-hunted or poached from Zenith Bank Plc where he was until his new appointment the Group Managing Director has his job cut out for him. He succeeds the incumbent governor of the bank Sanusi Lamido Sanusi who was on February 20 suspended for acts of financial recklessness among other crimes.

If a book will be judged by its cover, one would say that given Emefiele’s conservative mien he would most likely not want to introduce radical reforms the kind of which typifies his successor, SLS, tenure. But one could be mistaken on that. The new CBN governor has however promised to face core functions of CBN and has specifically said he would maintain strong exchange rate and not devalue the nation’s currency. He most likely will see to the full implementation of the CBN’s reforms such as the introduction of cashless policy, know your customer policy, etc.

I do not see Emefiele as someone in the mould of SLS who will be making political statements and drawing unnecessary attention to the institution he heads. We’re also not likely to see the ‘Father Christmas’ gesture of CBN which is part of what defines the tenure of Sanusi. In fact, donations to academic institutions and victims of terror may not continue under Emefiele but I do hope that the CBN commitments on Corporate Social Responsibility made under Sanusi will be honoured even if new pledges will not be made.

Emefiele needs to check the soaring inflation, maintain financial stability and come up with fiscal policies that will be salutary to Nigeria’s economy.  His administration would need to ensure that Nigerian banks and other financial institutions are fully operating on good corporate governance and obeying all CBN financial regulations to the letter. If need be, he should conduct another round of test to ascertain the health of the banks operating in Nigeria. He must have robust and professional rather than adversarial relationships with the Nigeria Deposit Insurance Corporation (NDIC), Asset management Company of Nigeria (AMCON), Federal Ministry of Finance and Chartered Institute of Bankers among others. The high mortality rate of Nigeria’s Microfinance Banks must be of concern to him as the MFBs have not been able to effectively play the pivotal role assigned to them in the economy. CBN under the new governor will have to introduce measures that will strengthen the operations of the MFBs. Same for the Bureau de Change (BDC). Operators of the BDC have been accused of being involved in money laundering. This has to be thoroughly investigated and if found to be true checkmated.

The new CBN governor must follow through the allegation of missing or unremitted funds from NNPC into the federation account made by his predecessor and ensured that the truth is unraveled. Another issue that should be of concern to Emefiele is that of high interest rate charged on loans by money deposit banks and their refusal to lend to critical sectors of the economy. As an insider, I expect that he would be in a better position to ensure that banks are able to give loans to customers at a more friendly   terms and that interest on savings is also increased by banks in order to promote saving culture.

On the whole, it is good that the new CBN Governor has about three months to understudy the current acting governor, Mrs. Sarah Alade so that when he gets  sworn-in in June he would be able to hit the ground running. Generally speaking, he would need to build on the noble legacies of Sanusi Lamido Sanusi and other predecessors in office while eschewing their pitfalls. He should be rarely seen, sparsely heard and allow the Corporate Affairs department of the Bank to do the job of public relations and enlightenment.