Godwin Emefiele: A Roadmap That Has Defined The Nigerian Banking Sector

The Central Bank of Nigeria(CBN) which commenced full operation on July 1 1959, was established by CBN Act of 1958, in order to enhance the effectiveness of monetary policy, regulation and supervision of banks as well as non-banking financial institutions. Also, the CBN helps to ensure monetary and price stability as well as rendering economic advice to the Federal Government. 

In 1997 under the regime of Late Gen Sani Abacha, the CBN was placed under the supervision of the Federal Ministry of Finance. Under this Decree, CBN was directly responsible to the Minister of Finance with respect to the supervision and control of bank and other financial institutions. The Apex bank lacked autonomy but given subjugated role in the monitoring of the financial institutions with little room for the Bank to exercise discretionary powers.

The present autonomous powers used by the apex bank today was bestowed upon it by the CBN Act 2007. This Act provides that the CBN shall be a fully autonomous body in the discharge of its functions. Under the Act, the CBN is charged with the objective of promoting stability and continuity in economic management.

Since 1958 till date, the CBN has had twelve governors with Mr Godwin Emefiele succeeding Sarah Alade on June 3 2014.

Mr Godwin Emefiele from Delta state is a seasoned Nigerian economist who was born in Lagos in 1961.  He is the former Chief Executive Officer of Zenith Bank PLC. Mr Godwin Emefiele had 26 years of Commercial banking experience before he became the Governor of CBN.

Mr Emefiele in his maiden press briefing on June 6 2014 after his resumption of office gave a presentation titled; ENTRENCHING MACROECONOMIC STABILITY AND ENGENDERING ECONOMIC DEVELOPMENT IN NIGERIA. During the press briefing, Mr Emefiele maintained that his vision for the Central Bank of Nigeria is to create a people-centred Central Bank by “delivering price and financial system stability and promoting sustainable economic development”.

Mr Emefiele has been an Ex-Officio Member of the Board of Governors in the International Monetary Fund (IMF) since 2018. And also, a Member of the Governing Board of International Islamic Liquidity Management Corporation (IILM) since 2018 till date.

In May 9 2019, Mr Godwin Emefiele’s name was submitted to the Senate for reappointment by President Muhammadu Buhari and asked the for approval. His reappointment was confirmed on May 10 2019 for the second term of five years. Mr Emefiele’s reappointment confirmed him as the first CBN governor to get a two-term mandate since the return to civil rule in 1999.

Mr Godwin Emefiele’s Achievements As CBN Governor From 2014 till Date

During his first term, he supervised an interventionist currency policy at the behest of the presidency, propping up the Nigerian Naira by pumping billions of dollars into the foreign exchange market.

He also introduced a multiple exchange rate regime to try to mask pressure on the Naira and avoid a series of devaluations.

On January 1 2016, the Mr Godwin Emefiele’s CBN administration introduced the Zero Commission on Turnover (COT). According to the Central Bank of Nigeria (CBN), the COT is the removal of commission on all customer-induced debit transactions by Deposit Money Banks (DMBs) in the country. The CBN through the Revised Guide to Bank Charges (RGBC) of 1 April 2013, provides gradual steps towards the application of this policy. The guide stipulated a phase-out plan from =N=3 (2013), to =N=2 (2014),to =N=1 (2015) and =N=0 (2016). Also, the policy permits customers to negotiable COT in each of the relevant year subject to the maximum stated in the plan.

Under Emefiele as governor, CBN introduced a series of measures which led to the recovery of Nigeria’s economy from the recession by the 1st Quarter of 2017. Building on these efforts, Nigeria’s external reserves rose from $23bn in October 2016 to over $45billion by June 2019. Inflation also dropped from 18.72 percent in January 2017 to 11.40 percent in May 2019.

Also, Nigeria’s GDP growth rose for seven consecutive quarters following the recession, and our exchange rate appreciated from over N525/$1 in February 2017 at the BDC window to N360/$1. With improved inflow of foreign exchange, the exchange rate has remained stable around N360/$1.

With Mr Emefiele  as governor of CBN, Capital Adequacy Ratio for the banking industry improved from 11 percent in June 2017 to over 16 percent in May 2019 and liquidity levels have also increased by over 20 percent within the same period. In addition, the ratio of non-performing loans in the banking system has reduced from 15 percent in June 2017 to 9 percent in May 2019, due to concerted efforts by the CBN and the DMBs.

With Regards to access to credit under Emefiele, the CBN, increased investment by the MSMEs and in addition, encouraged consumer spending and reduce our reliance on revenues from crude oil. To achieving this, the CBN under Emefiele introduced Anchor Borrowers Program, which has improved access to finance for over 1m small holder farmers. This was seen as efforts to improve cultivation of agricultural commodities, such as rice, tomatoes, fish, cotton and palm oil.

The Anchor Borrowers Program also enabled agro-processors and manufacturers to source their inputs from local sources, rather than relying on the importation of these items.

One of the major achievements credited to Emefiele as CBN Governor is the opening of the I&E window and the stabilizing Naira. The stability of exchange rate in recent months appear to have improved foreign reserves despite slow inflow foreign capital flows into the Nigerian economy.

Also, the Monetary Policy Committee (MPC) under Emefiele recently reduced Monetary Policy Rate (MPR) by 50 points, and analysts have been critical if the reduction in MPR is enough to accelerate growth.

On April 15 2020, Mr Godwin Emefiele and the CBN projected eight (8) significant steps to transform Nigeria as Coronavirus pandemic lingers. This was unveiled in a document titled; ‘Turning The COVID-19 Tragedy into an Opportunity for a New Nigeria’.

Emefiele told the press that, Nigeria cannot continuously rely on the world for food, education and healthcare, as the time has come to fully transform the nation into a modern, sophisticated and inclusive economy that is self-sufficient.

The Eight significant measures or steps according to CBN governor, Mr Godwin Emefiele included;

Quality infrastructure

As far as he is concerned, building a base of high-quality infrastructure is of the essence of any economy that desires to grow and be independent. According to him, such qualitative infrastructure is not complete without reliable power, as that is the only way to engender industrial activity.

Support for farmers

Emefiele added that if operators in the agriculture sector lack adequate support, the nation would still be far from its inclusive goal. He said, “We need to make adequate support for both smallholder and large scale agriculture production in select staple and cash crops.”

Ecosystem of factories

Importance of an ecosystem of factories and supply chains is also key to the plans of the CBN governor. According to him, it would be strategic for the nation to create an ecosystem of factories, storages and logistics companies that move raw materials to factories and finished goods to markets.

Robust educational system

No doubt, the nation needs new structures that better reflect the diverse learning requirements of Nigerian students. He said, “We need to Use our fiscal priorities to create a robust educational system that enables critical thinking and creativity, which would better prepare our children for the world of tomorrow.”

Developed Healthcare system

Health translates to wealth, so a nation that desires to be wealth must ensure its citizens are healthy. Emefiele too understands this fact, when he said in the document that it is important for Nigeria to develop a healthcare system that is trusted to keep all Nigerians healthy, irrespective of their social classes.

Affordable credit for SMEs

SMEs are the engine of every economy and their access to affordable credit determines their success. “We must facilitate access to cheap and long-term credit for SMEs and large corporates,” he added.

Pro-poor policies

Critics have argued over time that several policies in Nigeria are anti-poor. To address this, Emefiele emphasized on developing and strengthen pro-poor policies that bring financial services and security to the poor and the vulnerable.

Global competition

To expedite favourable global competition for Nigerian businesses, the CBN governor called for the development of venture capitalists for nurturing new ideas and engendering local businesses.

The seasoned Economist, former Zenith Bank PLC Managing Director and CEO and former Finance Lecturer went further to opined that Nigeria has all it takes to provide all these. He also said we should learn some lessons from India which recently banned exports.

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Shawn Solomon Elliot

Ukpiebo Solomon Elliot is a talented and well motivated Professional Associate Writer, Proofreader and Political scientist. He is a graduate of Political Science and Public Administration, University of Benin and also holds a Diploma in Desktop Publishing and Computer Science.

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