CBN: Path to unhindered policy consolidation

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There’s no doubt that Governor of Central Bank of Nigeria (CBN), Godwin Emefiele’s second tenure of another five years is a sure road to consolidating on existing policy that have kept the economy on track. Abdulwahab Isa reports

In a few days from now, Mr. Godwin Emefiele, will wrap up his first term tenure of five years.
Seamlessly too, by June 1, Emefiele will transmute from his first tenure to begin a second phase of his second term of five years.
The governor secured back-to-back executive and legislative arms of government’s endorsement to continue as CBN governor for another five years (2019 to 2023).
Already, he has affirmed commitment on the renewed mandate to the effect that CBN under his watch would not only sustain the polices also deepen it.
Although, he is yet to speak elaborately on the bank’s policy direction in the next five years; his body language amplifies policy consolidation.
At a recent conferrment of honorary doctorate degree on the governor by his alma matter, University of Nigeria, Nsukka, Emefiele said the bank would consolidate on existing policies and programmes that lifted the economy from the recession.
CBN had, in throes of recession, innovated policies and programmes that helped in bailing out the economy.

CBN policies in focus
The years 2016 and 2017 were Nigeria’s economy turbulent moments. Economy had passed into recession, putting both fiscal and monetary authorities on their toes.
The CBN governor and his lieutenants crafted various innovative policies and programmes to pull out the economy from recession.
The apex bank combined the function of fiscal authority with monetary policy in some cases.
Some of the policies under Emefiele that look good for continuation in the next five years of his second tenure include the Anchor Borrowers Programme, enforcement of items placed on forex restriction; pursuing revival of local textile industry, revival of palm oil production belt, sustaining current forex policy and deepening the the bank’s intervention in development finance institutions and SMEs.

ABP’s legacy
The ABP launched in 2015 is unarguably one of CBN’s successful programmes. It came up in the heat of the economic recession.
The positive mileage it recorded in the lives of Nigeria’s big and small holder farmers has been applauded by farmers themselves.
Agriculture under Emefiele enjoys increased lending through targeted intervention, and ABP is one of it. Determined to improve domestic supply of four commodities (rice, fish, sugar, and wheat), which consume about N1.3 trillion annually of nation’s import bill, ABP was introduced.
As an agriculture enthusiast, ABP is one programme that is dear to the heart of President Muhammadu Buhari.
Speaking on the initiative, Emefiele said: “Nigeria has been able to save over $800 million due to decline in the importation of rice.
“So far, the programme has supported more than 1,059,604 small holder farmers across all the 36 states of Nigeria in cultivating 16 different commodities over 1.114 million hectares of farmland.
“It has also supported the creation of over 2.5 million jobs across the agricultural value chain. A key emphasis was placed on improving rice production, given the considerable weight importation of rice had on Nigeria’s import bill.”

Forex restriction
CBN’s decision that restricts foreign exchange supply for importation of about 43 items is Emefiele’s daring decision ever.
Enforcement of forex ban on select items the country has capacity to produce locally items such as tooth pick, pencil, rice and others led to conserving of foreign exchange.
Import bill that arose from hitherto practise of unwholesome dispense of scarce forex to import these items has been reduced dramatically since CBN kicked off forex restriction policy on 43 select items.
Emefiele is positively disposed to its continuation in his second tenure.
Renewed commitment on textile, palm oil
The apex bank kicked off systemic interventions on textile and reactivation of dying palm oil production in South- south and South East regions this year.
To this effect, Emefiele has had series of stakeholders’ meetings with relevant parties in the sectors.
A whopping sum of $4 billion of Nigeria’s foreign currency is said to be spent annually on importation of textile materials and ready-made clothings.
Most textile factories operating previously in the country have locked down for inability to withstand dumping of cheap foreign textile materials in Nigeria.
Emefiele stepped in this year and is determined to reverse the ugly narrative in textile industry as forex restriction on textile materials import is to continue.
However, to prepare the ground for redemption of textile industry, Emefiele recently flagged off distribution of high yielding cotton seeds and other farm input to cotton farmers.
Similarly, he has his eyes on palm oil. This was one product Nigeria had a comparative advantage in its production.
Emefiele has stepped in to improve on the country’s palm oil production.
A maiden meeting between the bank and governors from the palm oil production regions held this year.
In his second term, Emefiele is expected to use the last leg of his five years tenure to revive these two key sectors- textile industry and palm oil sector.

Stable naira, low inflation
Emefiele holds tenaciously to CBN’s policy of a stable naira to the dollar and low inflation.
He’s not likely to trade off any of these. Inflation has been reined in from a high figure of 18 per cent two years ago to a moderately low level of 11.37 as at April this year.
The bank most likely in the next phase of Emefiele’s tenure will carry on with subsisting foreign exchange market policy, which allowed investors and exporters to purchase and sell foreign exchange at the prevailing market rate.
More importantly, the CBN is likely to carry through, under Emefiele, its risk-based supervision of banks.
The monitoring compliance of supervised institutions with the foreign exchange management framework issued in June 2016 through risk-based supervision is one policy to be sustained.

Warning to saboteurs
Emefiele is determined to bequeath success at the end of his tenure in 2023.
He said Nigeria had best policies on economy. The country is never in lack of good policies. The snag, he said, was the handiwork of saboteurs; enemies dropping spanners in system.
“I think it’s important to keep saying that Nigeria belongs to all of us, and that we have a role to play to make sure things get better,” he said. “Get better in the sense that I will also emphasize that Nigerian policy makers are good at developing policies but the biggest challenge of the Nigerian economic policy is that people try circumventing policies.
“Given this opportunity now, we will make it very difficult for people to circumvent economic policies. Policies that are meant to diversify our economy will be pursued very aggressively.
“Policies that would help to create jobs for our children, we must learn to respect our policies.
“If you don’t respect the economic policies of this country, and you fall short of our economic policies as an economic saboteur, you will be dealt with,” he warmed.

Last line
Emefiele is not likely to deviate from philosophy that guided his first tenure as CBN governor, which include creating a people- focused central bank to promote macro-economic objectives such as low inflation and a stable exchange rate, along with a focus on promoting inclusive growth and reducing unemployment in the country.

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