Uche Usim, Abuja
On Monday, June 24, Mr Godwin Emefiele, Governor, Central Bank of Nigeria (CBN) unveiled his five-year roadmap, outlining his second tenure’s programmes and projects.
The lengthy document encapsulates short, medium and long term endeavours as anxious Nigerians await patiently to see them unfold, at least to lift them out of poverty.
For a social coomentator and Lead Director of Centre for Social Justice, Eze Onyekpere, Emefiele’s blueprint is a very audacious project that requires a perfect fusion of fiscal and monetary authorities to urgently bring it to fruition. He added that it also requires collaborations from states and local government to succeed since a good number of the programmes are executed at the grassroots.
He also canvassed the need to set timelines and identify milestones to be tracked to ensure Emefiele’s mission is on track and not derailed.
However, the concern for many regarding the CBN boss’s blueprint is that President Muhammadu Buhari is yet to name his cabinet for the CBN to identify and work collaboratively with administration officials in the fiscal space.
Till date, the Ministers of Finance, Budget and National Planning, Trade and Investments and other relevant fiscal authorities have not been appointed even though half of the year is already spent.
At the state level, virtually all outgone governors left incredible debt profiles with little or nothing to show as the investment of the proceeds of the debts. This is seen as a horrible impediment to the beautiful plans of Emefiele because where states are to provide counterpart funding for identified projects, debt-ridden states may not.
Nonetheless, economy watchers believe Emefiele’s roadmap if aggressively implemented, can lift Nigeria’s economy from its current fragile recovery to a sustainable growth.
Already the CBN boss has hinted he intends to execute a fresh recapitalisation programme that would see the banking industry rank among the top 500 in the world. This means that in Emefiele’s second term, banks will be required to maintain higher levels of capital, as well as liquid assets in order to reduce the impact of an economic crisis on the financial system. This will also enable them increase their capacity to handle large ticket transactions whichthe Nigeria economy needs direly at this level of itsdevelopment.
According to him, the apex bank in his second tenure, will work closely with fiscal authorities, to target a double digit growth and annual non-oil exports receipts from $2billion in 2018 to $12billion in the next five years.
He said: “At the CBN, we commit to working assiduously to bringing down inflation to single digit; while accelerating the rate of employment.
“We intend to aggressively implement our N500 billion facility aimed at supporting the growth of our non-oil exports, which will help to improve non-oil export earnings. We will launch a Trade Monitoring System (TRMS) in October 2019, which is an automated system that will reduce the length of time required to process export documents from one week to one day. This measure will help support our efforts at improving our non-oil exports of goods and services
“We will also work with our counterparts in the fiscal arm in supporting improved FDI flows to various sectors such as agriculture, manufacturing, insurance and infrastructure. We will introduce a non-oil export aspect to the anchor borrowers’ programme, which will be focused on linking smallholder farmers to international buyers.
“Third, continue to work with the deposit money banks to improve access to credit for not only small holder farmers and MSMEs but also Consumer credit and mortgage facilities for bank customers. Our intervention support shall also be extended to our youth population who possess entrepreneurship skills in the creative industry.
“We shall also during this intervening period encourage our deposit money banks to direct more focus in supporting the education sector. “We want to grow our external reserves and support efforts at diversifying the economy through our intervention programs in the agriculture and manufacturing sectors.
Although, Emefiele’s postulation are consistent with President Muhammadu Buhari’s second term inaugural speech where he said his administration targets to lift 100 million people out of poverty by 2050, many still believe he was being too idealistic with his roadmap, considering the dearth of resources and infrastructure across the country.
They further argued that as laudable as the ideas articulated in the roadmap may sound, the apex bank has a lot of work to do, which involve stepping on powerful toes to achieve its desired goal over the next five years.
Industry pundits insist the CBN management must boldly square up against the smuggling cabal, who have found ways to bring in items banned from accessing foreign exchange at official rates.
In his reaction to the CBN boss’s 2nd term agenda, a developmental economist and financial consultant, Odilim Emwegbara, argued that Emefiele has clearly gone beyond his brief as CBN under him has become both a monetary and fiscal authority.
He said: “In a football match, there are two teams and a referee but CBN under Emefiele has become both a referee and the team.
“He is now like the Economic Minister of some sort and that is very dangerous. CBN should stick to its role of administering monetary policies. The livewire of any economy is its monetary policy. But Emefiele is now turning CBN into a Development Bank, like Bank of Industry and the rest. This is dangerous and not sustainable because he will expose himself and the apex bank to many vagaries including intense lobbying by politicians; and those who should have the powers of oversight over the bank like the National Assembly may lose it because of approaching him too frequently for one favour or the other.
“Again, where is he getting all the hundreds of billions of naira from? I believe there should be an audit of the CBN to know who got what, what collateral, counterpart funding and when is repayment? Nigerians need to know.
“More so, the bank recapitalisation plan, how will it unfold without putting a figure to it? Are you waiting to see Nigerians reactions before you attach a figure to it? Are their plans by some politicians to buy up the banks from proceeds of forex round-tripping? To me, we should remove banking regulation and supervision from the CBN to enable it focus on other core areas.
“Again, with regard to reducing interest rates, how can you achieve that when you’re tightening? It’s when you increase liquidity in the system and banks have more money and then as lenders, they will reduce interest rates. He should surround himself with economists so he’s properly guided. And you’ve set a five-year roadmap, do you even know what our country and the global economy will look like in the next one year, let alone five years time?
Just last week, erstwhile CBN Governor and Emir of Kano, Muhammad Sanusi II declared that Nigeria was on the threshold of bankruptcy following sustained unfavourable economic policies such as subsiding petroleum products and electricity tariffs.
He dropped the bombshell at the 3rd National Treasury Workshop organised by the Office of the Accountant-General of the Federation in Kano advised and advised President Muhammadu Buhari’s administration to immediately bury the subsidy payouts on petroleum and electricity if the economy is to regain its balance.
According to him, “the country is bankrupt and we are heading to bankruptcy. What happened is that the Federal Government do pay petroleum subsidy, pay electricity tariff subsidy, and if there is a rise in interest rates, the Federal Government pays.
“What is more life-threatening than subsidy that we have to sacrifice education, health sector and infrastructure for us to have cheap petroleum.
“If truly President Buhari is fighting poverty, he should remove the risk on the national financial sector and stop the subsidy regime which is fraudulent.
“Since I have decided to come here, you have to accept what I have said here. And please, if you do not want to hear the truth, never invite me.
“So let us talk about the state of public finance in Nigeria. We have a number of very difficult decisions that we must make, and we should face the reality. His Excellency, the President said in his inaugural speech that his government would like to lift 100 million people out of poverty, it was a speech that was well received not only in this country, but the worldwide.
“The number of people living with poverty in Nigeria are frightening. By 2050, 85 percent of those living in extreme poverty in the world will be from Africa. And Nigeria and the Democratic Republic of Congo will take the lead.
“Two days ago, I read that the percentage of government revenue going to debt services has risen to 70 percent. These numbers are not lying. They are public numbers. I read them in the newspapers. When you are spending 70 percent of your revenue on debt services, then you are managing 30 percent.
“And then, you continue subsidising petroleum products; and spending N1.5 trillion per annum on petroleum subsidy! And then we are subsidizing electricity tariff. And maybe, you have to borrow from the capital market or the Central Bank of Nigeria to service the shortfall in the electricity tariff, where is the money to pay salaries, where is the money for education, where other government projects”, Sanusi queried.
Also commenting on the five-year blueprint of Emefiele, the first Professor of capital market and the Chairman Chartered Institute of Bankers of Nigeria, Abuja Branch, Prof. Uche Uwaleke, said the document remains a good development with a lot of positive impact on the economy.
“The recapitalisation of banks will strengthen financial system stability and put our banks in a stronger position to finance big projects needed for development as well as play in the global scene. The planned introduction of a Trade monitoring system that reduces the length of time it takes to process export documents from 1 week to 1 day will surely boost exports. Also commendable is the plan to scale up the anchor borrower programme and target for massive funding support 10 commodities that consume a lot of foreign exchange to import.
“This will help conserve forex, grow external reserves, reduce food prices and possibly create job opportunities. The plan to build a robust payment infrastructure including through promoting payment service banks, shared agent networks, mobile money will go a long way in helping to achieve the target of 95 percent financial inclusion by the year 2024. “Similarly, the boost in the collateral registry where over N400 billion worth of assets have been registered as well as the NISRAL microfinance bank will no doubt improve access to finance by micro and small businesses. The major risk I see in the pursuit of price and monetary stability which is the core function of the CBN is the volatility in crude oil price given our dependence on the sector”, he noted.
Uwaleke however, advised the CBN to have a plan B in its five year plan. He said: “It is also vital to get the cooperation of the fiscal authorities, especially when it comes to the task of achieving double digit growth because on this very score, the CBN cannot clap with one hand”, he stated.
On what can be done to appreciably harvest the gains loaded in Emefiele’s second tenure roadmap, b Onyekpere said President Muhammadu Buhari and the entire Federal Government must key into the framework.
“When we say we want to produce what we consume and consume what we produce, it’s not just food we should focus on.
“How about the President, Vice President and other top government officials riding in Innoson vehicles or any other brands produced or assembled here in Nigeria?
“How about the Ministers and CEOs using them? It sends a message that we are serious about practicing what we preach. The president must come onboard this campaign and lead by example.
“Just imagine the president riding in made in Nigeria cars? You can’t imagine the ripple effect. There’s no way to remove the president from this. He needs to be charismatic. We need leadership in this regard.
“About the CBN Governor’s roadmap. It’s ambitious and like I said, the monetary, fiscal policy authorities must be on the same page. They should jointly look at the ERGP. We also need to bring the labour, trade, states and LGAs onboard.
“But as things are now, no Ministers, no cabinet and time is going. We need leadership to implement this audacious roadmap”, he explained.
Interestingly, the CBN has anticipated that it will not be a blissful journey all through.
Emefiele said: “Beyond Nigeria’s domestic challenge of high unemployment and subdued growth, the economy is faced with three external events, which have the ability to affect the growth trajectory over the near to medium term.
“First, rising trade tensions between the United States and China, United States and Mexico and subdued growth in the Eurozone as well as other emerging economies such as China, India, South Africa, Brazil, Argentina and Turkey, are affecting the outlook for global growth in 2019 and 2020.The World Bank according to its latest report, projects that global growth will decline to 2.6 percent in 2019 from 3.0 percent in 2018, as a result of the above-mentioned factors.
“The second external challenge that may emerge from rising trade tensions and a potential slowdown in growth in advanced and emerging economies, is the impact it could have on capital flows to emerging markets. The risk of sudden stops and reversals of capital flows has increased as some investors weigh the benefits of investing in safe assets in advanced economies relative to assets in emerging markets.
“Third, we are also witnessing rising volatility in the crude oil market occasioned by the rapid increase in the supply of shale oil by the United States, which has seen its production rise from 9 million barrels in 2017 to over 12 million barrels today. The rise in US production continues to put downward pressure on crude oil prices, despite restrictions on crude oil output by OPEC members and sanctions by the US on the purchase of crude oil from Iran and Venezuela”, he revealed.
He said plans were afoot reinvigorate efforts at driving the cashless initiative across the country, due to the immense efficiency gains that will be derived from it, and the impact it could have on our financial inclusion drive.