THE CHRISTIAN WALK

Moshood FayemiwoWednesday, April 13, 2016
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Austin, Texas, USA

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TIME FOR CBN GOVERNOR EMEFIELE TO GO OR BE LET GO

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hese days, conversations about the state of the nation almost always turn to state of the nation's currency, the Nigerian Naira and the institution whose job it is to manage the currency. That is in addition to petrol scarcity and the electricity crisis, the responsibilities for which lie elsewhere. But the situation at the Central Bank of Nigeria, which has been beset by several scandals under the tenure of its Governor, Mr. Godwin Emefiele, is especially harrowing. In addition to the frustrations of the average Nigerian, staff morale inside the apex has sunk to its lowest ebb in the institution's 58-year old history.

The picture that has emerged is one of an institution that has been distracted from its daily work by a crisis of leadership. Nearly each passing day unveils new "revelations" and controversy about morally reprehensible actions taken by Governor Emefiele in the service of personal agendas and vested interests. Because the state of the central bank and its leadership determines how our economy is managed, and because the bank's decisions affect every Nigerian's pocket, Godwin Emefiele's woes and what is happening at the CBN have become a symbol of creeping state failure.

When civil society groups are preparing laws suits and protest marches against a central bank governor, and when a state governor comes out in the latter's defense, playing the head-in-the-sand ostrich to the verifiable grounds for public opprobrium against the CBN Governor and calling Emefiele's critics "palm wine drinkers," you have to wonder if you are not in a "cassava republic."Or, perhaps, a palm wine republic. And the world is watching us, Africa's most populous country and supposedly its largest economy.

What is the problem? Actually, it is not one problem but several problems. Emefiele's and the CBN's crisis lies in three issues. Number one is the "Dasukigate" scandal, following revelations of how Emefiele approved a stupendous N60 billion naira "intervention fund" to the Goodluck Jonathan regime's National Security Adviser, Col. Sambo Dasuki, and went ahead to facilitate withdrawals of massive funds including $47 million in hard currency (in suitcases!) from the bank's vaults close to the 2015 elections. All of this was allegedly approved by President Jonathan. And all of this obviously in the service of a partisan political agenda to thwart the free expression of the people's democratic will and prevent the opposition (today's federal government) from achieving electoral victory.

This is a crisis of monumental ethical and moral proportions, not to mention possible illegalities involving money laundering. It reflects the reality that, despite democratic rule in Nigeria since 1999, our country's institutions have not truly evolved away from the days in which billions of dollars disappeared from the CBN vaults under the military dictatorships of Ibrahim Babangida and Sani Abacha. This is the banana republic syndrome, in which no institution is exempt from the maximum ruler's absolute power. It says much not just about the character of the Nigerian state, but as well that of the man at the helm of our central bank. Emefiele's rationalizations, through his agents in the media, that he "had no choice" but to obey a directive from former President Jonathan and that the CBN had to give the institutional owner of a bank account access to its account, is not convincing. This clearly was not a normal transaction as its methodology of removing huge sums in forex in suitcases showed. It is now evident that the Jonathan government, with Emefiele's active collaboration, used Nigeria's central bank as an ATM machine for the partisan political purposes of the People's Democratic Party (PDP).

Emefiele's second crisis has been the economy, specifically the Naira's exchange rate crisis as a result of the precipitate fall in oil prices on which our country has relied for 95 per cent of forex revenues. While this is a longstanding structural folly of Nigerian policy and politics that cannot be blamed on the CBN and its governor, Emefiele's handling of the crisis has smacked of incompetence. His knee-jerk, panicky and conflicting policy actions and reversals have made a bad situation worse. He has also politicized the issue, pandering to President Muhammadu Buhari's well known statist and command-economy instincts with questionable policy decisions and advice like maintaining a fixed but artificial naira exchange rate and capital controls. These policies have bred nothing but corrupt arbitrage practices and unemployment, as factories and businesses are unable to access forex and shed jobs with declining productivity.

The CBN Governor towed this "populist" line with the motive of ingratiating himself with the new president and to retain his job in the face of the Dasukigate scandal. In doing so, Emefiele abdicated his professional obligation to ensure that the CBN takes decisions independently, as required by the CBN Act of 2007, on the basis of sound economic logic. Instead, he politicized monetary and exchange rate decisions. President Buhari has since become the public face of exchange rate policy that ordinarily should be a matter to be communicated and explained by the central bank, and has loudly insisted against "murdering" the Nigerian Naira through devaluation.

Whether this position is right or wrong is a moot point. Never mind that the Nigeria Naira is already effectively devalued and the only ones accessing foreign exchange at official rates and round-tripping it for profit in the parallel market are the banks and other insiders in the system, while the average Nigerian business person can only obtain forex at black market rates. That parallel market rate, which is the real effective exchange rate, is what is driving inflationary pressures on the price of goods in the economy today.

It is doubtful that a dispassionate, independent examination of the issue of exchange rate policy has been undertaken by Emefiele's CBN. What passes for "forex policy" is false "populism," driven by vested interests (including Emefiele's and those of others around President Buhari) who are benefitting from the corrupt exchange rate regime but present this posture to the president as one of "national interest".

The CBN Governor's third crisis is the ongoing recruitment scandal at the apex bank, a matter that is now riling millions of unemployed and other Nigerians. Emefiele has reportedly recruited 909 individuals to the CBN since taking office in mid-2014. The recruitments were done in a secretive process in which no vacancies were publicly announced, and no written examinations and oral interviews were conducted as required by CBN's and civil service procedures. Many of these backdoor recruitments are children of high-ranking politicians and office-holders in President Buhari's government. Emefiele's secret recruitments of children of the politically powerful and super-rich was obviously designed to bribe the parents and sponsors of these wards into helping the CBN Governor retain his job in the face of the national outrage over the Dasukigate scandal. In an indication of the covert nature of this exercise and its intent, the names of the recruited individuals were amended to obscure their connections to their politically powerful parents.

Emefiele secretly recruited the children of Mamman Daura, who is President Buhari's nephew, Senate President Bukola Saraki, Kaduna State Governor Nasir El-Rufai, Interior Minister Abdulrahman Dambazzau, Inspector-General of Police Solomon Arase and Petroleum Resources Minister of State Ibe Kachikwu amongst a veritable roll-call of who's who in Nigeria. It has also been reported that each Senator in the National Assembly was offered a recruitment slot in the CBN for their wards. The Federal Character Commission has debunked the CBN's claim that the Commission gave the Bank a "waiver" to recruit "specialists" in a "targeted recruitment" without advertising vacancies.

This is not just systemic nepotism, but also systemic corruption. It exposes the hypocrisy of the purveyors of President Buhari's "change" agenda and, just like the famous incident of the "padding" of the 2016 budget, constitutes a massive embarrassment for the president. It is telling that the "specialists" Emefiele's CBN could find in a truly "targeted" recruitment were the children of influential politicians and government officials in a position to whisper into President Buhari's ear in favor of the beleaguered CBN Governor so that he can hang on to his job in the face of several scandals.

President Buhari can no longer remain quiet over the illegal actions of a scandal-prone, ethically- challenged and professionally- incompetent central bank governor. Take a look at the genesis of the problem: Godwin Emefiele, who at the time of his appointment as CBN governor was the Managing Director of Zenith Bank, should never have been appointed the CBN Governor in the first place. He evidently had neither the character nor the competence or gravitas for the job. His appointment in early 2014 was symptomatic of the deep corruption that ran through the veins of the Goodluck Jonathan government, which was controlled from behind the scenes by big-money cabals and donors such as the banker and business mogul Jim Ovia, the founder of Zenith Bank and Emefiele's benefactor.

It is said by sources in the know that huge amounts of money changed hands, and in exchange the crony capitalist cabal was "rewarded" with the CBN post. In return, Emefiele, known to have a sterling track record of dancing to his master's tune and with little professional backbone, would "cooperate" with the Jonathan presidency and the PDP for the 2015 presidential elections. With a prime national strategic institution thus debased through its leadership selection, we could have gotten nothing else from Emefiele's stewardship of the CBN other than corruption and more corruption, incompetence, and a steady descent into the inferno of a thoroughly politicized central bank. It is a clear and present danger to Nigeria's economic security when our central bank is led by a man who can clearly sell his soul for a mess of porridge. Governments and foreign investors around the world know what is happening in the CBN, and will not bring significant investments into Nigeria for as long as Emefiele heads the apex bank and maintains his self-serving policies.

Anyone who thought Emefiele was suitable to serve as the head of our apex bank either did not know him and his antecedents, or was willfully ignorant. The latter group includes the many beneficiaries of Emefiele's famed "generosity" to politicians and godfathers of various stripes. Thus dislocated and transported from the transactional wheeling and dealing that is the hallmark of Nigerian commercial banking to the more nuanced and intellectually challenging world of public policy at the central bank, the Zenith Bank front man was out of his depth. With the unforeseen, devastating electoral loss of power by President Jonathan, the only natural response the CBN boss could muster was to quickly transfer his "loyalty" (read "sycophancy") to the incoming Buhari regime, backed up by bribing key players in the new order of power with jobs for their wards (and perhaps more) in order to protect his.

Had Mr. Emefiele been a true professional, all of this would have been unnecessary. Unlike ministers, who can be removed or reassigned at the whim of the president, a CBN governor's job is tenured for five years, and the institution has considerable independence in its operations. To remove the head of the apex bank before his or her tenure is up, is something for which a president would have to have a really weighty reason. (This was the case when the former CBN Governor LamidoSanusi turned himself, in effect, into a political gladiator against the Jonathan government instead of staying within his brief at the CBN.)For one, to formally remove the CBN Governor from office requires the consent of two-thirds of the Senate (remember those reported recruitment slots for the senators?). This provision, correctly, was meant to protect the governor from ravenous political wolves who might want to sack him or her for refusing to print endless tons of naira for the electoral or personal fortunes of politicians.

What should happen now? He who comes to equity must come with clean hands. Since Mr. Emefiele's hands are dirty, he cannot now claim the equitable defense of a secure tenure. There is more than enough basis, between Dasukigate and the recruitment scandal, not to speak of the failure of his forex policy and its dire impact on the Nigerian economy and the public loss of confidence in his office engendered by all of this, for him to be removed from office somehow.

Formally removing him from office should be a last option, as it would confirm what some have seen as an unhealthy trend of removing apex bank governors unceremoniously starting from Sanusi. The reason this option is not optimal is not because it will affect the economy negatively. It won't, because market players in Nigeria and abroad have already lost confidence in Emefiele and expect his exit anyway. So his anticipated departure, unlike in the case of Sanusi in which the market had confidence in the then CBN Governor, has already been "priced" into the market. The real reason to find another way is to avoid psychological institutional damage to the CBN itself.

The best option then, is that Emefiele should be sensible enough to jump before he is pushed. This being Nigeria where people have a life-and-death attachment to public office, and Commodore EbituUkiwe, Ibrahim Babangida's deputy, and Ngozi Okonjo-Iweala in the Obasanjo presidency have been rare exceptions of principle, it is unlikely that Emefiele will go of his own volition. President Buhari should now formally ask the apex bank boss for his resignation.

For all the provisions around CBN autonomy, which are necessary for the bank's operational effectiveness, no central bank governor can survive a public or private expression of loss of confidence in his or her stewardship by the head of government. The CBN is still an institution of the Nigerian state and not its own republic. If Emefiele resists such a request, which is unlikely, then President Buhari can "escalate" to more draconian measures. Lamido Sanusi was forcibly taken out by a "suspension" only because he rebuffed President Jonathan's polite and private request to resign.

Godwin Emefiele's past two years as Governor of the CBN have been an unmitigated disaster for the CBN as an institution, for the Nigerian economy, and, increasingly, for the credibility of the Nigerian state and its governance. It is time for him to go or be let go.

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