The Central Bank of Nigeria (CBN) has been in the news for both good and bad reasons since the inception of the President Bola Ahmed Tinubu administration over a year ago.
From Godwin Emefiele’s dismissal and subsequent arrest to the unprecedented devaluation of the naira, the controversial transfer of staff from Abuja to Lagos, the firing of 26 out of 29 directors, the revelation of the theft of $6.3 million from the CBN vault during Emefiele’s tenure, and the intense pressure on the Olayemi Cardoso-led management to restore normalcy, the CBN has never faced such a tense and tumultuous period in recent memory.
Who is to blame? The CBN Governor, Olayemi Cardoso, and his four deputy governors? President Tinubu’s sudden decision to float the naira? Emefiele’s evident recklessness and partisan politics? Or the entire political and economic system.
Cardoso and his four deputies have résumés and experience comparable to those of professionals anywhere in the world. However, critics argue that, despite his experience as a commercial banker, Cardoso lacks the expertise of a central banker. They also contend that his previous role as Tinubu’s commissioner for economic planning and budget could influence his performance, suggesting he might view the CBN governor’s position as merely a form of patronage.
The apex bank reached its lowest point during the Emefiele era; as its regulatory and stabilising functions became intertwined with politics and business interests. Court documents revealed that on February 8, 2023, $6,230,000 in cash was stolen from the CBN by four individuals. Additionally, the Federal High Court in Lagos recently ordered the final forfeiture of properties valued at N12.18 billion linked to Emefiele.
These developments indicate that Emefiele’s successor will encounter significant challenges. Nevertheless, the primary role of a central banker is to ensure stability during crises, focusing not only on critiquing past actions but on delivering effective results that positively impact the economy and its citizens.
Cardoso and his team are currently grappling with several challenges: the instability of the naira, public perception of the CBN, and widespread belief that bureaux de change operators wield undue influence, while the CBN has struggled to establish a mutually beneficial operating framework with them.
The reality is that Cardoso’s ‘by-the-book’ approaches have not yielded desired results. Although the CBN has managed to achieve some consistency in forex supply and clear the backlog of dollars owed airlines and other foreign investors, the transfer of staff to the Lagos office and the dismissal of 25 out of 29 directors and additional staff must be considered in the context of policies initiated as far back as during reign of Lamido Sanusi.
Regarding the dismissal of directors and senior staff, how can Cardoso be expected to work effectively with individuals who were deeply influenced by Emefiele’s actions? Even in military, police, and paramilitary forces, such restructuring is not uncommon, where hundreds of generals can be retired simultaneously, and the world moves on. It’s also important to commend Cardoso and his team’s collaboration with the Nigeria Economic Summit Group (NESG) and other stakeholders to enhance the business environment. For the CBN to build trust, ensure price stability, and implement effective monetary policies that prevent economic instability and improve foreign exchange rates and inflation, such efforts are crucial.
On the other hand, why hasn’t the CBN been able to restore the naira to its true value against the dollar? The biggest mistake we make in Nigeria is sometimes applying global theories and laws to our unique system, which operates differently from other countries. These theories and laws succeed elsewhere because they strictly adhere to the principles and standards that support their effectiveness. However, CBN’s attempts to elevate the naira to its expected value have consistently defied conventional economic laws and theories.
Cardoso and his team should consider adopting a strategy that combines established economic laws and theories with innovative approaches. One of their key assets could be neighbouring countries like Cameroon, Chad, Republic of Benin, Equatorial Guinea, and Niger Republic, along with other West and Central African nations, as well as Nigeria’s agriculture and manufacturing sectors. These countries import significant quantities of agricultural and manufactured goods from Nigeria, making them prime targets for the CBN’s efforts to strengthen the naira.
A proactive step would involve the CBN collaborating extensively and effectively with governments of border states to establish well-structured international free-zone markets at border points. These markets would exclusively transact in naira for all Nigerian products sold there. This approach could incentivise businesses from neighbouring countries to prefer purchasing goods in Naira due to its low cost advantage, thereby increasing demand for the naira.
Furthermore, the CBN needs to address one of its weakest points: its inadequate public relations (PR). There is a pressing need to enhance their PR strategy because, currently, a majority of the public perceives the current CBN management as solely on a vendetta mission to discredit anything associated with Emefiele and engage in political maneuvering, rather than recognising their efforts to rectify systemic issues.
The Cardoso team must acknowledge that despite being a strategic institution, the CBN is susceptible to being viewed like any other Nigerian government entity. Therefore, it is crucial for the CBN to establish and maintain a robust PR programme that not only informs the public about its activities but also portrays the institution as independent from political influences, despite being overseen by politicians.
Part of the CBN’s PR strategy should involve revitalising and restructuring its commendable agricultural programmes, which were previously undermined under Emefiele’s tenure. Cardoso should seize this opportunity to lead the relaunch of these programmes and engage with the public to demonstrate his commitment as a genuine central banker, focused on economic stewardship rather than engaging in political vendetta.
Zayyad I. Muhammad writes from Abuja, zaymohd @yahoo.com, 08036070980
