Economic Issues
Godwin Emefiele’s Reappointment: A Break With Tradition? -By Tayo Oke
Governor of the Central Bank of Nigeria, Godwin Emefiele, has been nominated to serve a second five-year term in office by President Muhammadu Buhari. This was conveyed in a letter sent to the Senate a few days ago. Barring any unforeseen events, Emefiele’s reappointment should be confirmed by the upper chamber without fanfare. Meanwhile, financial pundits across the board have almost been unanimous in hailing the move as “good news” for the market. Markets do not like unpredictability, a stable hand in the saddle is always preferable to any signs of uncertainty that would normally accompany the search for, and nomination of, a fresh (unknown) character. As it happens, the CBN is a powerful institution indeed; it reports directly to the President, rather than its parent ministry, which is the Ministry of Finance. In fact, the CBN has, at times, (justifiably) been accused of usurping the powers of the ministry itself, by stepping into the arena of fiscal policy as opposed to maintaining a strict adherence to monetary policy. When the CBN starts doling out money to particular sectors of the economy, and “picking winners” as such, and also doing the same to a myriad of other “good causes” as all CBN governors usually do, then, it has expanded its remit beyond the borders of monetary policy. This column has indeed argued over the course of Emefiele’s current tenure that the governor routinely conflates its role as governor with the role of Minister of Finance. Lamido Sanusi as governor of the CBN before him, was even more outlandish in this regard.
The main purpose of this week’s commentary, however, goes beyond highlighting the idiosyncratic features of the CBN governor; it touches on a peculiarity of Nigeria and its pervasive ethnic geopolitics even in the citadel of finance. What would you say if I said that apart from the post-war governor of the CBN governor, Dr. Clement Nyong Isong, (a southerner, 1972-1975) appointed by General Yakubu Gowon, the war-time Nigerian military ruler (a northerner), in peace time, no northern President of the Federal Republic of Nigeria has ever appointed anyone outside the northern region as governor of the CBN? Emefiele thus represents a welcome break with tradition, and the reason for this is more politics than economics or financial stability, which is explained later. But, while you are still catching your breath on this bold assertion, and before you start doubting the objectivity of this column, no southern President of the Federal Republic of Nigeria has ever appointed anyone outside the region as governor of the CBN either. The research on this is sound. Details of it will be provided at the end of this piece.
Emefiele (a southerner) was originally appointed by President Goodluck Jonathan (a southerner) in 2014. President Buhari inherited him from his predecessor in office. Before then, Mallam Lamido Sanusi (northerner) was appointed the CBN governor by President Umaru Yar’Adua (a northerner) in 2014. Again, he was retained in office by President Jonathan with whom he later fell out very badly, leading to the governor’s removal from office. Before Sanusi, Professor Chukwuma Soludo (a southerner) was appointed by President (General) Olusegun Obasanjo (a southerner) in 2004, who had earlier appointed Dr. Joseph O. Sanusi (a southerner) as the CBN governor from 1999-2004. General Abdulsalami Abubakar, Obasanjo’s predecessor in office in 1999, had inherited Dr. Paul Ogwuma (a southerner, 1993-1999) as the CBN governor from the then Head of State, General Sani Abacha (a northerner, 1993-1998), who himself had inherited the CBN governor from Ernest Shonekan, the “interim” Nigerian President (southerner, August 1993-November 1993). Before then, the CBN governor, Alhaji Abdulkadir Ahmed, (a northerner) was appointed by President Alhaji Shehu Shagari (a northerner) in 1982. He was retained in office by the military ruler who overthrew Shagari, General Muhammadu Buhari, in 1983, and was subsequently retained in office by Buhari’s successor, and coup leader, General Ibrahim Babangida, 1985-1993. Prior to Shagari’s inauguration as a civilian Head of State, the departing military junta under General Obasanjo (a southerner) had appointed Mr. Ola Vincent (a southerner) as the governor of the CBN, 1977-1982.
Before then, Obasanjo’s predecessor, General Murtala Mohammed (a northerner) had appointed Mallam Adamu Ciroma (a northerner) as governor of the CBN, 1975-1977. Alhaji Aliyu Mai-Bornu, Nigeria’s first indigenous CBN governor, was appointed by the departing British colonial CBN governor, Mr. Roy Pentelow, to his position in 1958. Mai-Bornu served until 1967. The office of the CBN governor was left vacant between 1967 and 1972, the first and only time in its history.
The mind-boggling question in the reader’s mind, at this point, is why the tradition of north appointing north and south appointing south to the supposedly ‘neutral’ and ‘independent’ office of the CBN governor in this country has subsisted for so long? More so, is there any evidence that this has brought disproportionate financial or political benefits to the regions? The North-South bias in the appointment of the CBN governor in this country is an “analytical puzzle” according to the latest research conducted on the issue. “There is no empirical data to suggest that a CBN governor of a northern origin would necessarily be expansionary-minded any more than his counterpart in the South would, and vice-versa, but it would be significant if the political leaders making the appointments believe that to be the case”, according to the research findings. No central bank anywhere in the world is truly ‘independent’. For a start, central bank, by definition, focuses mainly on banking and financial matters, so, it is an institution for bankers and financiers. The CBN tries to break out of this mould from time to time by delving into areas outside its specific remit, by asserting its ‘independence’ from political influence. Any step into fiscal measures, however, necessarily involves making ‘political’ choices.
The apex bank lends credence to its critics when it starts seeing itself as de facto Ministry of Finance, which clearly it is not.
The Nigerian banking sector in general, and over the years, has become oligopolistic in nature according to the latest IMF report on the issue. In addition, the CBN is the Federal Government’s main banker, its activities are overseen by a board in which the governor is the chairperson. It stands to reason, therefore, that the enormous interest in who becomes governor of this powerful institution is merited, and so is the degree of influence he exercises across government departments. No one wants to take a chance on who is appointed governor. President Buhari has been widely criticised for “ethnic bias” in his appointment of personnel to key government positions latterly. His mind would have been focused on this highly critical view of his first tenure prior to reappointing Emefiele. In this regard, the appointment of Emefiele may either be an aberration or a break with tradition. Only time will tell.
The findings of the research on
