OPINION: CBN In The Last Decade

By Uche Nworah, Ph.D

Kelvin Gilbert’s article in ‘The Leadership’ newspaper of Saturday, 3rd of June, 2023, titled, ‘Looking At CBN In The Last Decade’ is nothing but public relations hogwash.

In the United States, the US Federal Reserves focuses on their core mandate. The officials are not in bed with politicians and the federal government. They operate as an independent federal agency and financial institution. The same goes for the Bank of England. We usually hear from these Central banks when they have to make statements on monetary policies and financial related policies.

Many of these countries’ citizens do not even know the names of the Heads or Governors of their countries’ Central banks. Knowing their names are not important because, what matters to the citizens are the positive impact of the policies on their daily lives, on businesses and on the economy as a whole. Central banks in the developed countries perform their strategic financial systems and economic stability functions quietly.

What do we have in Nigeria? The opposite. Nigeria’s Central Bank (CBN) is very much in bed with politicians and the federal government. The officials act on directives from the President and sometimes those around the President. It does not matter to them if such directives are not in the best interest of the nation. This has to stop.

President Asiwaju Bola Ahmed Tinubu should ensure that the CBN remains independent as it should. A new CBN Governor is required at this time to clean up the system.

Only in Nigeria will a CBN Governor (Godwin Emefiele) still remain in office and be campaigning to be President of Nigeria. He took impunity to another level by taking the federal government of Nigeria to court to force the President’s hand to allow him to retain his CBN job and still contest for the office of the President of the Federal Republic of Nigeria. Is this not conflict of interest and divided loyalty? How will he be able to run the affairs of the CBN and still be campaigning at the same time? Where did he plan to get the money to run for the office of the President from?

Even during the tenure of Mallam Sanusi Lamido Sanusi (SLS), the CBN Governor before Emefiele, there were some actions of his that were not very good. During his tenure, the CBN became Father Christmas donating hundreds of millions of Naira to some Northern universities and other causes outside their core mandate.

There is a lot that has been observed to be wrong at CBN. The bank is overstaffed. What are all the staff doing? In the digital era where technology in the work environment has made many roles redundant, must the CBN continue to retain redundant staff? Must they still be recruiting staff based on ‘paddy paddy’ arrangements rather than on job needs? An urgent staff audit is required at the CBN.

It has also been reported that the CBN is populated mainly by people from a section of the country. What about people from the other regions?

Look at the way the CBN handled the Naira currency change earlier in the year. Trillions of Naira were spent printing the new currency notes that Nigerians can’t still access. Who would ever forget the difficulties they put Nigerians through during that process leading up to the 2023 general elections? A lot needs to change at the CBN and soon.

Finally, the Asiwaju Bola Ahmed Tinubu government should ensure that the next CBN Governor is an experienced economist and banker. It will be disastrous for the nation’s economy if we are to experience the banking sector crises of 2007/2008. The knock-on effect were felt in the stock market and this led to the erosion of stock values of hundreds of thousands if not millions of Nigerians. I was personally affected. This was as a result of weak corporate governance in the banks and banking sector regulation.

In May 2023, the CBN announced that it had withdrawn the operating licenses of over 132 Micro-Finance banks (MFB), 3 Finance houses and 4 mortgage banks. Many of the MFBs and stakeholders have protested that the treatment was unjustified. Some of them claim that the issues the CBN raised which led to the revocation were being resolved with CBN’s regional offices. Hopefully, the new government will look into this and order a review so as not to paint all the MFBs with one brush. The defaulting ones after review should have their licenses permanently revoked in line with CBN regulations.

This issue of revocation of MFB, Finance houses and mortgage banks licenses raises a critical question of the state of banking sector regulation in Nigeria. How effective is it? What is the state of health of Nigerian commercial banks? Are their ‘dead bodies’ buried within the banking system that we should worry about now?

There are still more questions for the CBN, much more than the answers provided in Gilbert’s X-ray of CBN’s activities in the last 10 years.

Nworah is a media consultant