Economy: Appraising Emefiele’s vision and mission

Forum 1 year ago

Economy: Appraising Emefiele’s vision and mission

THE Governor of Central Bank of Nigeria, CBN, Godwin Emefiele, is a pragmatic and transformational leader. Pragmatic leaders solve problems and are decisive and focused even in the face of unwarranted and scathing criticisms. They do not allow emotions to cloud their judgment. Transformational leaders have idealised influence, encouraged innovations, and created change that will shape the future.

Emefiele’s vision and mission are in tandem with those of the apex bank.

The CBN’s vision is “to be one of the most efficient and effective of the world’s central banks in promoting and sustaining economic development”. The mission is “to be proactive in providing a suitable framework for the economic development of Nigeria through the effective, efficient and transparent implementation of monetary and exchange rate policies and management of the financial system”.

The traditional roles of central banks are formulating and implementing monetary policy, determining interest rates and directing money supply to achieve price stability, regulating and supervising the banking and financial systems, managing foreign reserves, and ensuring the stability of financial markets. Because central banks are at the heart of the economy, they are easy targets for criticism by both the informed and uninformed, and especially by politicians whose policies seem to be against their personal interests. CBN has been on the spot since the recent policy on the redesign of the naira, but Emefiele has remained focused in the face of unwarranted criticisms, even by those who do not have a proper understanding of the modern concept of central banking.

As a pragmatic and transformational leader, the CBN governor understands that there has been a global change in the theory and practice of central banking, and aligns with the concept of a neo-liberal approach to central banking as espoused by Gerald Epstein, Professor of Economics and Co-Director, Political Economy Research Institute, PER, University of Massachusetts, Amherst, MA, USA.

Emefiele understands that central banks in developing countries perform both traditional and non-traditional roles. From the onset of his tenure, he noted that the vision of the CBN “draws inspiration from our understanding of the multiple mandates of the Bank to pursue both price and financial system stability as well as provide complementary developmental functions”.

He added that “virtually all central banks, including the Bank of England, BOE, and the US Federal Reserve (the Fed), have used direct means to support economic sectors”. Emefiele understood that central banks in developing countries also needed to serve as financial catalysts by performing developmental and promotional activities, because developing countries do not have vibrant capital and money markets.

Deep and liquid capital markets help to improve the monetary transmission mechanism, increase public and private access to long-term finance, and engender inclusive growth by widening participation in the economy. But because of the lacuna, CBN has been particularly aggressive in development financing, especially in the agriculture and manufacturing sectors.

Development financing played a significant role in accelerating India’s industrial development. CBN’s Anchor Borrowers Programme, ABP, is one of the many development financing initiatives of CBN under Emefiele, whose objective is to improve productivity in areas with high domestic demand, where opportunities exist to improve domestic supply such as rice, fish, wheat, sugar and conservation of foreign exchange.

CBN’s drive to boost and promote local rice production and consumption is predicated on the notion that Nigeria cannot attain greatness by importing everything and anything. The ABP triggered bumper harvests of local rice, but the irony is that the imported brands of rice have continued to flood the market and are costlier due to the uncanny penchant Nigerians have for imported products.

CBN under Emefiele has been proactive and demonstrated a great sense of responsibility and clarity of purpose with its policy initiatives. The Bank’s proactive stance was most evident in the package of its policy initiatives, both pre- and post-COVID-19. The apex bank initiated many creative policies that supported various sectors of the economy and helped to insulate it from the devastating effects of the pandemic.

Likewise, the latest policy on the redesign of the naira will help to strengthen the economy, promote financial inclusion and control financial corruption and the cyclonic circulation of illegal money in the economy. It will also enhance the cashless policy, which in turn, will reduce the cost of managing currency and help to control inflation.