Barely 6 Months in the Saddle, Emefiele Rated Best Central Bank Governor

Barely 6 Months in the Saddle, Emefiele Rated Best Central Bank Governor       

 Emefiele

In spite of the unease caused by the global oil crisis and the attendant pressure on the Nigerian economy, the Governor of the Central Bank of Nigeria, Mr. Godwin Emefiele, who resumed duty six months ago, was adjudged the best central bank governor in 2014 for his exemplary leadership, in an independent survey, reports Festus Akanbi

For the Governor of the Central Bank of Nigeria, Mr. Godwin Emefiele, it is work, work and work. Emefiele, whose emergence as the apex bank governor caught many as a surprise in February this year, has not only proved his mettle as a governor in a crisis period, his meticulous handling of the nation’s monetary policy since he resumed duty on June 3, has certainly justified his appointment.

Perhaps, it is his style, which has effectively kept him away from controversies that makes him analysts delight. The former managing director of Zenith Bank Plc has from the onset pledged to uphold professionalism in the banking industry.

Members of the banking community were therefore not surprised when recognition began to roll in from different corners of the globe for Emefiele, who effectively took charge barely six months ago.

Growing the Economy
According to a survey published by a Portuguese newspaper, The Express, last week, the Nigerian central bank governor was adjudged the best central bank governor in the ranking that captured central bank governors all over the world in 2014.

In the ranking, Mark Carney of the Bank of England lost the leadership to Godwin Emefiele, of the Central Bank of Nigeria.

The newspaper, which based its ranking on a survey conducted by an independent firm, admitted that comparison of central bankers can be difficult and unfair especially when they are responsible for different economies and suffering from very different issues which arise in the world economy. Even so, it is possible to do so in view of minimum indicators of evaluation related to the gross domestic product (GDP), a central objective of economic policy, and the evolution of prices, whose control remains one of the main purposes of the central banks.

The Express ranking in 2014 was led by Godwin Emefiele, who moved up to number one position compared to 2013 to dethrone the Governor of the Bank of England, Mark Carney, who won last year. Mario Draghi, the European Central Bank (ECB), remained in place 11.

Growth in the Nigerian Economy
The newspaper explained that Emefiele’s success was due to the good performance of the Nigerian economy, growing by an average of six percent in 2013 and 2014.
The apex bank, under Emefiele, was also singled out for recognition for its ability to keep inflation in check in spite of the twin problem of global oil volatility and the fact that Nigeria is preparing for a general election next year.

For this year, the International Monetary Fund (IMF) estimates an inflation rate of around 8.3 percent, and the objective of the central bank is to keep it below 10 percent. One of the risks hanging over the Nigerian economy however is oil price decline, which has tumbled below the $65 per barrel benchmark in the Nigeria’s 2015 budget.

The publication explained that Dragi, the European Central Bank Governor remained in the same position because he took the euro zone out of recession, the second time since the financial crisis, but the ECB has several problems ahead. Prices, which are still far from the two percent target. In November, they fell again to 0.3 percent and there are several countries with even inferior rates. Portugal, according to the National Statistics Institute had a rate of zero percent in November. To increase the difficulties for Draghi, Greece again is a focus of concern in the markets, raising the pressure to move forward with a program similar to the United States or Britain.

Effective Macroeconomic Policy
One of the positive developments associated with Emefiele’s regime is the deceleration in all the three measures of inflation since September 2014; a development which observers said has provided headroom for policy flexibility and manoeuvre.

And according to Emefiele, the robust output expansion amidst strong headwinds arising from a weakening of the international oil market gives credence to the efficacy of the CBN’s macroeconomic policy.

His recognition came shortly after he emerged as Chairman of Committee of Central Bank Governors of the ECOWAS sub-region. He was elected by fellow Central Bank Governors from ECOWAS countries at the 31st Meeting of the Committee of Governors of the West African Monetary Zone (WAMZ) in Abuja/
Emefiele replaced the former Governor, Malam Sanusi Lamido Sanusi, who was suspended from office by President Goodluck Jonathan before the expiration of his tenure.

Emefiele’s Agenda
While unveiling his agenda, Emefiele had promised to pursue a gradual reduction in interest rates, explaining that “A comparison of selected macro-economic aggregates from some emerging market countries, including South Africa, Brazil, India, China, Turkey and Malaysia indicate that Nigeria has one of the highest Treasury Bill rates.”

Explaining further, the CBN  Governor said “Such high rates creates preserved incentives for commercial banks to simply buy virtually risk-free government bonds rather than lend to real sector,’’ he said .

He said that to enhance financial access and reduce the cost of borrowing credit, there was the need to pursue policies targeted at making Nigeria’s Treasury Bill rate more comparative to other emerging markets.

Emefiele said that while reduction in both deposit rates would encourage investment attitude in savers, a reduction in lending rates would make credit cheaper for potential investors.

“The bank will also begin to include unemployment rates as one of the key variables considered for its monetary policy decisions.

“In the interim, we will continue to maintain a monetary policy stance, reflecting the liquidity conditions in the economy as well as the potential fiscal expansion in the run-up to the 2015 general elections,’’ he said.

On the exchange rate policy, he said the key goal would be to maintain exchange rate stability in view of the high import dependent nature of the economy and the significant exchange rate it passed through in recent years.

According to him, a systematic depreciation of the naira would literarily translate to considerable inflationary pressure with attendant effect on macro-economic stability.

“Therefore, under my leadership, the bank will continue to focus on maintaining exchange rate stability and preserve the value of the domestic currency.

“We will sustain the managed float regime in the management of the exchange rate as this will allow the bank to intervene when necessary to offset pressure on the exchange rate.

“To support this strategy, we will strive to build-up and maintain a healthy external reserve position and ensure external balance,’’ Emefiele said.

The new CBN governor explained that there was no doubt that reducing the interest rate and maintaining the exchange rate was a daunting twin goal.
“In this pursuit, the bank will work with all stakeholders to device measures to ensure the goals are achieved.”

On Financial System Stability, he said the bank would continue to sustain the effective management of the potential threats and avoid systemic crisis.

“The core of my vision is to effectively manage potential threats to financial
stability and create a strong governance regime that is conducive for financial intermediation, innovative finance and inclusiveness.

“In this regard, we hope to anchor on two pillars of management factors that create liquidity shocks and zero tolerance on practice that undermine the health of financial institutions,’’ he said.

To achieve the goal, Emefiele said the bank would work with stakeholders to aggressively shore up the reserve and also engage both the fiscal and political authorities.

He assured Nigerians of enhanced banking supervisory purview over the banking system and strengthening of risk-based supervision mechanism to ensure overall health and banking system stability.

Emefiele said he would create a Central Bank that is professional, apolitical, people focused and a bank that would dissipate its energies on building a resilient financial system to serve growth and development needs of Nigerians.