For the seventh consecutive time, the Central Bank of Nigeria CBN) in September retained benchmark interest rate at 14 per cent, alongside other monetary policy rates to be greeted with mixed reactions, some of them very harsh.
A popular economist who usually reviewed the decisions on television called the rates retention a “do-nothing” decision.
At a time the economy needs urgent reflation for growth and to ease the excruciating financial pain of millions of people around the country, “do-nothing” was taken by some people to mean cluelessness.
Opposition against Mr. Emefiele had, indeed, heightened in September last year to earn him the label of “stubborn Governor” when he ignored the advice of Finance Minister Kemi Adeosun to reduce monetary policy rates.
A day before the MPC meeting, Mrs. Adeosun, apparently voicing the concern of manufacturers, urged the CBN to consider cutting the 14 per cent benchmark interest rate to support government’s stimulus plan to borrow cheap funds locally, and to bail out the economy.
For a man who was seen by some of his fierce critics as a wimp, Mr. Emefiele was expected by them to take the advice hook, line and sinker. They must have been disappointed. In a unanimous decision, MPC left the prevailing rates unchanged, signalling a lack of consensus in the government’s economic team on the best way to guide the economy out of recession.
The CBN governor said the MPC’s decision to ignore Mrs. Adeosun’s proposal in favour of retaining the rates was informed by the bank’s resolve to continue to tighten liquidity in the monetary policy to limit the balance of risks weighing against one of its key functions of stabilizing price.
“Both monetary and fiscal authorities have the same intention to achieve growth. But, the direction through which each wants to achieve it may differ, for as long as you still achieve the growth,” Mr. Emefiele had said.
But some people were not convinced. They saw it as an anticipatory defence mechanism for cluelessness.
“That is the stubbornness of a clueless man,” an economic commentator had said then. “The man is just stubborn. Don’t also forget the 41 items he has continued to restrict forex access to.”
In fact, some people had expected Mr. Emefiele to be fired after that time, forgetting that just as in good times; you don’t fire a central bank boss in times of general economic crisis if they didn’t cause it. Doing that sends out signals of hopelessness, causing loss of confidence, especially among investors.
Clueless or stubborn, Mr. Emefiele stayed on
Managing interest rates and inflation requires delicate balancing because of their inverse, see-saw, relationship. In the United Sates, by moving interest rate targets up or down, the Federal Reserve attempts to achieve target employment rates, stable prices, and stable economic growth. It will raise interest rates to reduce inflation and ease (or decrease) rates to spur economic growth.
The “do-nothing” story was to change last September. With the economy out of recession and the rate of inflation dropping for the seventh consecutive month to 16.01 per cent in August, the comment of the highly respected economist was widely expected. “It is the same do-nothing decision, but it appears to be working,” he had confessed. The reward for focus and perseverance but there is more work to be done!
He acknowledged that at last month’s MPC meeting: “On the argument to hold, the Committee believes that the effects of fiscal policy actions towards stimulating the economy have begun to manifest as evident in the exit of the economy from the fifteen-month recession.
Although still fragile, the fragility of the growth makes it imperative to allow more time to make appropriate complementary policy decisions to strengthen the recovery.
Secondly, the most compelling argument for a hold was to achieve more clarity in the evolution of key macroeconomic indicators including budget implementation, economic recovery, exchange rate, inflation and employment generation.”
Mr. Emefiele seems to be proving many people, including those who didn’t believe he was the right man for the job, wrong. Louder and more visible commendations for the CBN have come recently, but of course his success will be judged ultimately by the effects of his monetary policy on the health of the economy.
The current re-assuring image of Mr. Emefiele is a sharp contrast to the subdued version he took to Plot 33, Abubakar Tafawa Balewa Way, Abuja, on June 3,2014 to start the plum job of Governor of the Central Bank of Nigeria.
Before the trip to Abuja, he served as chief executive officer and group managing director at Zenith Bank Plc, a very high profile job in one of Nigeria’s flagship private enterprise.
Despite the remarkable success of the bank, he served under the towering image of Jim Ovia, which somehow eclipsed Mr. Emefiele’s fine qualities. Mr. Ovia is the founder of the bank where he also worked as CEO until 2010, when he transferred into the chairman role.
In Abuja, where Mr. Emefiele replaced the current Emir of Kano Emir Muhammadu Sanusi II (Sanusi Lamido Sanusi), he had walked into the shadows of another towering image of a bright and vocal economist and banker, who had left in controversial circumstances. And in a storm!
Mr. Emefiele is a relatively quiet person; this quality prompted those opposed to him to hastily conclude that the Jonathan government had opted for a pliable governor, offered by his supporters. Although Mr. Emefiele had paid his dues, his handlers were quiet about it or in his characteristic reserved nature; he had chosen to focus on his work rather than flaunting his elite resume.
Who is Emefiele?
He is from Ika South Delta State, but a Lagos boy. He was born in Lagos, Nigeria’s commercial capital, where he began his primary school education at Government Primary School, Victoria Island, formerly Ansar-U-Deen Primary School, Igbosere, Lagos. He continued at Maryland Comprehensive Secondary School, Ikeja, Lagos. People raised in Lagos are noted for their street-smartness and so Mr. Emefiele couldn’t be a pushover. Observers say he is much tougher than he looks.
He proceeded to the University of Nigeria, Nsukka where he obtained his Bachelor of Science degree in Finance & Banking (Second Class Upper). To that he added an MBA as the Best Graduating Student in Finance at the same university.
He went on to deepen his knowledge of Macro-economics at Oxford University having obtained various qualifications and executive education studies in Negotiation, Strategy, Leadership, Critical Thinking, Delivering Value/Profit from Harvard University, Stanford University and University of Pennsylvania, Wharton Business School.
Before he became Group Managing Director of Zenith Bank, he had served as the Executive Director in charge of Corporate Banking, Treasury, Financial Control and Strategic Planning of Zenith Bank Plc.