Godwin Emefiele

Monday comment2

Boniface Chizea writes that the CBN governor should pay attention to development of the economy

 Congratulations are in order even as the momentous event of your being appointed to a second term as the Governor of the Central Bank of Nigeria is almost becoming a fading memory.

 What I intend to do in this presentation is to draw your attention to some issues that must engage your attention, not because you are not aware but it helps and it reassures when knowledgeable minds think alike. In the first place you must fully arm yourself with the amour of confidence. No one quarrels with success and one does not necessarily change a winning formula. You must pay scant attention to those who come with the preachment of orthodox text book economics which as far I am concerned are generalized prescriptions to be adapted and applied advisedly as it aligns with the prevalent situation in hand.

 The ultimate decider for you is what works and what will work in our particular circumstance. For instance, as part of the mandate of the Central Bank of Nigeria, it has been included the need to pay attention to matters relating to the development of the economy. This specific mandate might be missing in the mandate of monetary authorities in other climes and therefore you should pay careful attention to what the multilateral financial institutions say while discounting the complaint that you are now dabbling into aspects that should engage primarily the attention of fiscal authorities. You must proceed as you keep your counsel to decide what you think is in the best interest of Nigeria. Afterwards it remains a fact that no multilateral financial institutions on its own could have caused a renewal of your mandate but the fact that God is on your side to achieve the results we now celebrate.

 Certainly from where I stand there might be issues which we should try to address as we move on some of which exist because of the exigencies of our particular situation and which expectedly should be resolved as circumstances improve. The question of multiple exchange rates will be one. But recently you were quoted as saying that we do not have multiple exchange rates in the country.  I am not in the picture regarding whether you said so or if you did the rationale which underpinned such an observation. The fact remains that we have more than one exchange rate in the economy pertaining to the various windows in existence. It is trite to observe that what actually differentiates the windows is essentially the fact of their different rates coupled majorly with the particular source of funding for each window. But this is a matter to be addressed opportunely with an eye on the need not to upset the apple cart of macroeconomic stability which we are now enjoying.

There is the feeling that because you came from the banking system that you are overly protective of banks. But my take is that you have a right to ensure that the banks operate profitably otherwise the financial system will not be vibrant and robust and as major actors; that would undermine the pursuit of healthy financial system able to discharge its critical function of financial intermediation. The Monetary Policy Committee has already commenced the process by asking for prudential limits to be determined for the banks as they warehouse their funds in gilt-edge government securities. This is like giving a kick on the butt of the banks to rise to the challenge of extending badly needed credit to the real sectors of the economy which has the potential to jumpstart growth and catalyze employment opportunities.

 The banks should also be encouraged in their best interest to try and embrace the concept of shared services wherever possible as a means of gaining operating costs advantage and as much as possible leverage on cutting edge advancement in technology to impact positively on the quality of service for which there is a consensus that we have witnessed over the years across the board improvement. Therefore services have improved and this is just therefore to draw the attention of the banks not to make the mistake of resting on their oars.

It might be time to revisit the bank tariffs to accommodate some of the strident complaints which have been made by bank customers. For instance customers have been heard to question the meaning of account maintenance fee to which VAT charges are also added. Attention must be paid to financial inclusion which as at 2016 stood at 58.4% or 96.4 million adult population as those who have access to financial services. This leaves a yawning gap which has the potential to blunt the effectiveness of monetary policy as that underscores the limit of the reach of policy as monies outside the formal system cannot be targeted. It might be time to revisit such other programmes which take banking services conveniently closer to the customer. In this regard one is reminded of programmes such as mobile banking and agency banking. It will be good to put on the thinking cap to ascertain what will make such programmes more effective, possibly any other measures that would make banking services more convenient and therefore more attractive to the bank customer. The opportunity embedded in financial technology in this respect must be optimized.

It is also necessary that attention is not taken away from some of the success stories of your administration. One of such programmes that immediately come to mind is the Anchor Borrowers’ programme. It has been reported that players under the scheme are now being assailed with a deluge of imported rice as a result the commensurate level of demand is lacking. It might be time to think outside the box to see how this menace will be frontally tackled. Why should imported rice be cheaper than home grown one for instance? So there is the need to ascertain what the problem really is so that strategies could be put in place to ameliorate the situation. The fact that the Anchor Borrowers’ concept is being extended to other products would seem not to be generally known. There is the need for further enlightenment in this regard.

 There are many special funds that have been provided over the years. Why have they not been impactful? There is an urgent need for this question to be answered for effective road map forward.

 The need for cooperation and meeting of minds between the fiscal and monetary authorities need not be over emphasized as it goes without saying that monetary policies are effective to the extent that there is the needed complementarity with fiscal policies. We admire your recent foray as you are beginning to reach out to centres of excellence in the country to share your message with them. Considering the highly charged environment in which you operated during your first term, it is understandable that you were not quite able to do so. But that is the way forward and therefore we recommend that you stay the course. We pray that the years ahead will be better than the past ones and that you are able to write your name boldly in gold as you bequeath lasting legacies to the greater benefit of the Nigerian economy.


Dr. Chizea wrote from Lagos