Pressure grows on Nigeria’s CB chief
Earlier this year, an open letter in the Nigerian media from a group of businessmen attacked the “shameful” record of central bank governor Godwin Emefiele and demanded that he should go. With Africa’s largest economy in recession for the first time in 25 years, the letter reflects growing anger directed at Emefiele, whose insistence on keeping the naira artificially high is believed to have worsened Nigeria’s oilprice induced slump.
Three years into his tenure, the flak is flying around the 55-year-old career banker once admiringly described by colleagues as a discreet man who gives little away. The advertisement, which appeared in several newspapers and online news portals, is the most prominent expression so far of widespread discontent with the government’s naira policy among senior figures from the worlds of business and investment. “Whatever hard-won reforms we had, (the benefit) has been undone in the past two years by (Emefiele),” one of the signatories, accountant Feyi Fawehinmi, told Reuters. Another ad is being planned, he said.
Emefiele imposed currency restrictions in 2015, defying bankers’ advice to float the naira and raise interest rates as some other oil exporters had done. Investors fled as the once promising emerging market was ejected from key bond indexes. Economists and investors say they have given up seeking any clues from Emefiele, who once read out a 32page statement on interest rates without referring to the issue uppermost on his audience’s mind - the frozen naira.
They are scathing about Emefiele, citing policies that have choked off the flow of dollars to official channels, fuelled a naira black market and ravaged domestic industry. “Emefiele is responsible for the currency mismanagement. If someone achieves to beat down a currency like that, then a foreign investor like me can’t support that,” Lutz Roehmeyer, director at Landesbank Berlin Investment, told Reuters. “Absolutely no one trusts or believes that this central bank is still able to fix this,” he said, describing the forex policy sarcastically as a “masterstroke” that destroyed the economy.
Strong currency
That policy accords with President Muhammadu Buhari’s desire for a strong currency. A 74-year-old former military ruler, Buhari has reminisced publicly about the 1980s when the naira traded at 1.3 per dollar, apparently viewing currency strength as a matter of national pride. But Kingsley Moghalu, a former central bank deputy governor, says that does not absolve Emefiele of blame.
“Of course, there are many concerns that the bank is not being run in an independent manner in terms of policy ... But we all know that one of the burdens central bankers always have to carry is to do the right thing even if it is not popular,” said Moghalu, who teaches now at Tufts University. —Reuters