QUICK THOUGHTS ON CBN’s “ACTION PLAN” FOR NIGERIA’S ECONOMY, By Bolaji Afolabi

President Bola Ahmed Tinubu recently appointed a new management team for the Central Bank of Nigeria, (CBN). Expectedly, there were pockets of complaints and murmurs about the state of origin and geo-political zone of the new CBN czar, Olayemi Cardoso, who hails from the very same state with the President. Many Nigerians acknowledged the competence, expertise, and integrity of the Lagos-born professional and seasoned boardroom guru. Majority of players in the financial sector posited that the appointment of the one-time Lagos State Commissioner for Economic Development was well-thought and commendable. It seems to signal positive direction in the management of the country’s ailing economy. Many stakeholders likened his appointment to installing a round peg in a round hole. Bankers, economists, capital market operators, industry top-players, and other stakeholders unanimously saluted the choice of Cardoso and his immediate lieutenants. It was widely acclaimed that Cardoso and his deputies will not only bring a breath of fresh air to the bad and battered image of the CBN, they will collectively uplift Nigeria from the throes of avoidable economic disequilibrium.

Majority of Nigerians, however, doubted the role the CBN would play in the Tinubu administration. This apprehension was triggered by the inglorious and infamous role played by the past CBN leadership under former President Muhammadu Buhari. With Godwin Emefiele as the chief executive of the CBN, the apex bank dipped it hands into numerous programmes that were clearly out of its operational mandate. The CBN rolled out initiatives that were not only “un-CBN,” but totally outside it’s purview. Worse still, it got enmeshed in the puddle and dynamics of Nigeria’s complex politics. It got so bad that most of its programmes were overtly politicised. With this, competence and capacity were substituted by crass sectionalism and ethnic considerations. Professionalism and ethical standards took the backseat as incapacity, incompetence, and indulgence took centrestage. Massive indolence, multi-layered ineffectiveness, multi-faceted inefficiency, and outright impunity became the new normal. The CBN under Buhari’s administration shamefully, and shamelessly went millions (if not trillions) of miles outside it’s core monetary policy mandate. At some point, it appeared the CBN was lost in focus and direction, as it got involved and piloted just any initiative that caught the attention of Emefiele or the powerful cabal in government.

That Nigerians had genuine doubts about the new CBN management is understandable. Some analysts opined that since the executive arm of government, the presidency in particular played stealthy but crucial roles in the “un-making” of CBN under Emefiele, Cardoso and his team may toe and take same negative route. At some point, the CBN under Emefiele almost became a direct appendage of the presidency. Following their successful clearance by the Senate, Cardoso and his team, from inception had challenges of how best to wean themselves off the Emefiele baggage they inherited. The integrity deficit medal that Emefiele and his team wore for years with shamless arrogance was still hovering and dangling. To many Nigerians, under Emefiele’s superintendence, the CBN through its languid, lethargic and lackadaisical governance regimen, gave window for many unethical practices, culminating in the brazen buffeting of our commonwealth. Encouraged and emboldened by CBN’s spineless, languorous, impassive tendencies, and it’s failure to assert it’s independence, widespread malfeasance and outright chiseling of national economy was rampant. The CBN, under an obviously fearful, insouciant chief executive became an “offspring” of the famous “cabal” which denominated the Buhari presidency. The institution was in eternal dalliance to the whims and caprice of the insatiable “power bloc.”

Inheriting such strategic institution with inherent failings and frailties can be disheartening. The discoloration and disfigurement of the almost-sanctimonious status of the CBN was huge. The integrity deficit, and negative competencies which the old order transmitted to the new management of CBN was humongous. While Cardoso and his deputies decided to “hit the ground running” accepting the sorry-state of CBN’s operational failings as challenge, Nigerians watched with bated interest and moderate enthusiasm. There is palpable expectation about the new CBN’s capacity to deliver change in the nation’s monetary system.

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Cardoso made some bold moves upon assumption of office, as they stepped up some internal changes, vis-a-vis its activities, and vision-outline, even as Nigerians have adopted a “let’s-wait-and-see attitude. Cardoso’s tentative steps are still construed as “initial gra gra” a popular street expression. The new CBN leadership has come to the inevitable conclusion that it requires strategic and time-specific actions. The herculean challenge of restoring confidence, trust, and belief in Nigeria’s economy is daunting. Refocusing the negative mindset of Nigerians and re-directing the shrinking morale of CBN staff will not be a tea-party. The free-fall, and continued nose-dive of naira has made the task more troubling and prodigious for Cardoso and company. The systemic impunity and graduated incompetence showcased under the Buhari administration which birthed stunted economic growth, unimaginable unemployment, fast-paced inflation, galloping poverty, near-economic-paralysis and hanging debts are issues that Nigerians expect the CBN to tackle and swiftly too.

The Emefiele years as the chief executive of Nigeria’s apex bank will arguably go down in history as the worst. Under his watch, the CBN posted negative ratings in all areas of operations. The negative perception of the CBN was total, and complete across the country. It was so bad that even those who benefited from Emefiele’s discordant, dissonant, and incongruous leadership made scathing and scratchy remarks about some disturbing bureaucratic bottlenecks and atrocious policies of the CBN. The CBN displayed unbridled insensitivity, professional incapacity, and gross incompetence in some of its operations. This led to wanton financial mismanagement, deliberate misapplication of funds, outright corruption, and large-scale pilferage of our commonwealth. According to reports, the CBN under Emefiele wasted about 10 trillion naira on quasi-fiscal activities. The CBN, with Emefiele as “captain of the ship” embraced unorthodox uses of monetary tools and lack of corporate governance. It plunged into development finance activities; non-effective and in-efficient forex rules which stifled access by those who truly needs it; lacked proper delineation, and understanding of monetary and fiscal policies.

Speaking as Guest of Honour at the 58th Annual Dinner of the Chartered Institute of Bankers in Nigeria, (CIBN), which held in Lagos recently, Cardoso, rolled out his team’s “action plan” for the economy. The turnout at the classy, quality event was impressive which was no surprise considering the personality and office Cardoso occupies. Leveraging on his major interface and interaction with key stakeholders in the economy, many of whom are his friends, colleagues and associates Cardoso enunciated his plans for the economy. For many, it was an opportunity to “hear him out.” For few others, it was to “put a face to the name.” Aware of the dwindling economic fortunes of Nigeria, these key stakeholders were eager to know Cardoso’s plan to pull Nigeria from the woods and re-order it to gradual recovery, and sustainable growth and development. Many of the dignitaries came to the event with cautious optimism. They had no doubts about Cardoso’s well-known, and celebrated qualities. They were fearful, however, of the nation’s messy economic situation.

Olayemi Cardoso, an accomplished economist was honest, sincere, direct, and candid in his address at the event. Like most Nigerians, he regretted the painful negatives and hardship Nigerians had experienced, over the years. He assured that though the state of Nigeria’s economy is worrisome, he was confident that it can come on the rebound and experience growth provided necessary steps and actions are taken. He counselled experts, industry players and Nigerians to wake up to the realities of the difficult situation that will lead to gradual, and positive development. According to him, the CBN is up to the herculean task of re-tooling, re-focussing, and re-engineering the economy. He declared that tough but necessary decisions will be taken to ensure the overhaul of our economy. Nigeria will also be repositioned for meaningful growth and development.

While one commends Cardoso’s forthrightness, the CBN should realise that it must go back to basics as it relates to monetary policy. Going back to proper, orthodox and result- driven monetary policy that has a “human face” will drive Nigeria’s economic transformation. Also, if the CBN focus and deepen it’s feedback mechanism, the core of monetary policy the economy will be energised and strengthened. To restore, sustain, and deepen macro-economic stability, the CBN must ensure proper co-ordination between fiscal and monetary policies. As a matter of necessity, the CBN must be focused and deliberate on price stability, and resolving threatening inflationary challenges.

The move by the CBN to embark on new recapitalisation of banks is needful and timely. The planned increase of banks deposit base to achieve the 1 Trillion dollars economy within seven years as projected by President Tinubu is courageous and encouraging. Fact is, the value of naira in 2005 when the last recapitalisation took place under Chukwuma Soludo has dropped significantly. The value of 25 billion naira in 2005 is not the same in 2023! With some Nigerian banks opening and operating branches in some African countries, it has become necessary and strategic for the CBN to increase the capital base of banks. In doing this, the CBN, must not only get the buy-in of relevant stakeholders but ensure the exercise is done in strict adherence to ethical standards and terms. It must not be rushed but done systematically such that margins of error and complaints will be very minimal. Transparency, firmness, fairness, and credibility must be the guiding principles.

In 2005, there was general consensus by all stakeholders that banks recapitalisation was imperative. Top-players and practitioners in relevant sectors of the economy agreed that it became necessary to re-position banks and financial institutions for strategic contributions to national development. As the CBN is considering further increase of banks capital base, it is advised that given the negative perception index of the apex bank, the fragile national economy, corrosive poverty, and other pervasive economic challenges ravaging the country, Cardoso and his team should involve relevant stakeholders, MDAs, the legislature, media, and others in the exercise. Also, the CBN must attempt to know the real capacity of our banks to “take shocks.” The apex bank needs to verify and ascertain the proper position of Nigeria’s economy. The CBN must immediately and as a matter of necessity be pre-emptive in it’s operations to enable banks have the required capacities to “meet shocks.”

One is happy that Cardoso has promised not to do things that are clearly out of CBN’s mandate. This is heartwarming and encouraging. This will be a break from the past where the CBN got enthralled, entangled, and enamoured with confounding relish in activities that were outside it’s core mandate. This in turn brought untoward hardship and hunger to Nigerians. It is very puzzling that the immediate past CBN management allegedly pumped 10 trillion naira into the economy through bogus, nebulous and ludicrous intervention programmes. These, however, has led to mind-boggling hunger and escalating hardship, even as increasing-inflation, and monstrous poverty encompasses the nation’s geographical space. It is sad that few Nigerians in the comfort of their homes and offices emplaced immoral, illogical, and selfish programmes as conduits to fleece our commonwealth with reckless ferocity and throwing the country into economic jeopardy.

The CBN has been making some of the kinds of soundbites Nigerians want to hear. Cardoso and his team are taking courageous decisions geared towards stabilizing and improving the economy. Some of these policies include the unification of the exchange rate, minimal moderation in forex pricing which has reduced the rot-rate in the economy, evolving measures to improve liquidity in the forex market, focussing on it’s core monetary mandate towards ensuring price and exchange rate stability. As outlined by the CBN chief executive at the event, the apex bank must ensure restoration of corporate governance, anchor explicit inflation-targeting on proper interest rate; emplace result-driven and results-yielding policies and frameworks for economic growth and development; strengthen regulations in the sector towards building trust and confidence. When these and other pragmatic policies are conceptualized and implemented, the economy will experience reasonable stability. The CBN must deliberately roll out and enforce policies focussing on Reforms and Incentives. These reforms and incentives must target foreign direct investment, diaspora and the non-oil exports. With determination, political will, and realistic collaboration with critical stakeholders, the CBN can turnaround Nigeria’s dwindling, sliding, and sinking economy.

* BOLAJI AFOLABI, a Leadership and Governance Strategist writes from Abuja