“Mr. Emefiele has the responsibility to find a way of restoring the era of strong legacy of excellent financial sector management set in motion by his predecessor.”
Godwin Emefiele assumed office on Tuesday as the 11th governor of the Central Bank of Nigeria, CBN.
The former Group Managing Director of Zenith Bank Plc. is succeeding Lamido Sanusi, whose suspension from office by President Goodluck Jonathan last February over alleged financial recklessness triggered a major crisis that not only unsettled the delicate stability of the entire banking sector, but also the confidence of investors in the country’s economy.
Though the crisis appears to have been brought under control in the last three month under the interim management of the acting governor, Sarah Alade, Mr. Emefiele appears to find himself in office as the helmsman at the CBN when the vestiges of the declining confidence are yet to completely ebb.
In the aftermath of the ugly face-off between Mr. Sanusi and the government over the $49.8 billion oil revenue controversy, the autonomy and independence of the CBN appeared to have been negatively impacted.
Followers of developments at the Central Bank said on Tuesday that as Mr. Emefiele assumes office, he needs to urgently settle in and map out ways of rebuilding the confidence and help railroad the county’s economy on the path of sustained stability and growth.
Despite the unfortunate politicization of the role of the bank governor, Mr. Emefiele has the responsibility to find a way of restoring the era of strong legacy of excellent financial sector management set in motion by his predecessor.
According to the former acting Governor, Mrs. Alade, the thrust of the concerns of the management of the Bank as she found out during her brief stint at the helm revolves around the need to sustain financial system stability and restore investors’ confidence in the country’s economy.
As he assumes office, the aggregate expectation of most Nigerians is that Mr. Emefiele would immediately think about how to exert the appropriate response, through appropriate monetary instruments, to contain potential shocks capable of unsettling the financial system stability.
Having overcome the uncertainty that beclouded the financial system in February and March as a result the Sanusi crisis, there has been some observed stability in the foreign exchange market, money market and capital market.
For Managing Director, Financial Derivatives Company, Bismarck Rewane, although the macroeconomic environment appears to be relatively stable, several risks are still lurking in the corner for the new CBN governor.
“The conflicting trends of core and headline inflation since January 2014 will have to be put in perspective as well as the concerns over the eroding fiscal buffers; all of these could accentuate another speculative attack on the naira,” Mr. Rewane said.
For the Lead Director, Centre for Social Justice, CSJ, Eze Onyekpere the challenge for the new CBN governor has to be how to assert his office and reassure all stakeholders, particularly executive and legislative authorities, on the need to maintain CBN’s autonomy and independence away from politics.
Mr. Onyekpere said Mr. Emefiele has to reposition the CBN as a team player in the administration, not in the sense of condoning corruption, but by ensuring coordination and harmony between the monetary and fiscal authorities in the country.
“Nigerians expect greater transparency and accountability in the management of the funds and policies of the CBN. There must be clear policy implementation pathways that are not based on the rule of the thumb of the new governor. In undertaking banking supervision, sound risk management should be mainstreamed, as an imperative to encourage banks to bring back vibrancy to the economy,” he said.
He stressed the need to control the level of inflation by keeping the rate at single digit, while continuing with measures to control excess liquidity in the system and balanced with the challenge of growing the economy.
Mr. Onyekpere said the mere fact that investors and producers borrow at very high uncompetitive rates to do business was the reason for the stunted growth of the economy and the difficulty in facilitating job creation, enhancing value addition, improving efficiencies and growing the capacity utilisation rate of industry.
Therefore, he said, access to credit at a reasonable rate for the real sector and the small and medium-term enterprises, SMEs should be one of the major policy concerns of the CBN under Mr. Emefiele’s leadership, to promote economic growth and poverty reduction.
The ability of the CBN to check the depreciation of the Naira in the short to medium term, he said, must also occupy the top priority in Mr. Emefiele’s agenda to ensure that the national currency does not continue to play a second fiddle to the major currencies of the world.
