The suspension by President Bola Ahmed Tinubu and eventual arrest by the Department of State Services (DSS) operatives of Godwin Emefiele, Nigeria’s central bank governor who served three presidents, beginning with Goodluck Jonathan who appointed him and very briefly, Tinubu, who suspended him, has left unsurprised analysts in and outside Nigeria, suggesting that the country should seriously reconsider the way and manner it appoints the governor of its central bank.
Emefiele’s exit marks the second time in 24 years the head of the supposedly independent Central Bank of Nigeria (CBN) would be leaving office in an unceremonious manner, one tinted with acrimony. He came into office June 4, 2014 after his predecessor, Sanusi Lamido Sanusi, was also suspended by then President Jonathan, for what many believed was for his outspokenness and for fiercely holding independent views that ruffled the Presidency.
But analysts say that the position of the central bank governor in Nigeria suffers from the failure to delineate its institutional professionalism from the political power play that goes on around the occupant of the country’s powerful executive presidency.
“Well, it is usually a political appointment, dressed up as a technical process,” Anthony Goldman, an economic and political risk analyst, told Business A.M. in London.
Some analysts say given the position that Nigeria holds in Africa, it should be showing itself as an example to the rest of Africa in the application of global best practices in what it does. For instance, analysts Business A.M. spoke to all agreed on the need to get the best independent minded professional for the job.
The process in the past of getting someone made governor of the CBN has always been shrouded in political secrecy. The analysts are, therefore, suggesting that Nigeria should join the community of transparent countries who recruit their central bank governors through an open public headhunting process instead of leaving it to the president to appoint from a suggested list of two or three people thrown up by some political considerations or individuals who easily fail when it’s time to defend the independence of the institution.
They noted Godwin Emefiele’s failure as a governor of the CBN to assert his independence as a central banker and how allowed the Mohammadu Buhari administration to browbeat him to abuse the CBN Act with regards to Ways and Means advances to the federal government which ran to nearly N23 trillion without the required authorisation from the National Assembly, and even infringing the law with regards to the limits the government could borrow through that means. They attributed these breaches to be possible because of the way and manner he was recruited for the appointment.
There are two to three strands of the debate in this regard. There is the one about who should actually be leading the central bank between a banker and an economist. It has been a longstanding debate especially because the majority of those who have led the apex bank have been bankers, including Emefiele, who was formerly the chief executive of Zenith Bank Plc. Some have occasionally said that some of the apex bank’s failures stem from this.
But Uche Uwaleke, a professor of capital markets and president of Capital Markets Academics of Nigeria thinks otherwise.
“I have heard some people argue that the next CBN Governor should be an Economist and not a Banker. In my view, the possession of an Economics degree is only a necessary but not a sufficient condition,” Uwaleke told Business A.M. in electronic response to questions.
And then there is the question of process, the recruitment process through which the governor of the Central Bank of Nigeria (CBN) emerges. Short of the mystery that has often followed the emergence in the past, there is a general new thinking shared now for this to follow a proper recruitment process in which the position is thrown open for Nigerians from all over the world to apply.
“A goldfish has no hiding place, the popular saying goes. Therefore, if the government wishes to do the right and proper thing, it should appoint the best brain available not necessarily drawn from within but anywhere in the world, so long as the person is a citizen,” said Chris Anyokwu, a professor of English at the University of Lagos, in response to questions.
Nigeria and Nigerians have suffered for many years from a perception problem in which they are tainted with the image of corruption. These images are reinforced by simple failures like not having in place world class processes for selection or appointment of serious key officials of state like the governor of the central bank. And this has often led to a loss of confidence in the country as a whole.
In London, Goldman suggests that you cannot separate the technical from the political. “The trick will be to see if there is someone who fits both the politics and the technical skills required,” he told Business A.M. He particularly stresses the point about the appointment being too linked to politics. “I know it was only a week [time Emefiele spent under Tinubu], but was Emefiele the only governor to serve under three Presidents? I can’t remember who Abacha’s last governor was. Perhaps he made it through to Obasanjo? Or IBB’s (Babangida) last guy. I guess we’ll have to wait for the evidence but certainly Emefiele supporters will point to a long trailed tension with some political interests now close to the new President,” Goldman stated. Going forward, Goldman says: “But the CBN is no ordinary bank. Only a very particular person can do a good job, and for progress on the economy, it needs a good Governor. The trick will be to see if there is someone who fits both the politics and the technical skills required. I know in the past there have been attempts to look outside Nigeria. It’s a bold idea but no one before has fitted the bill.”
In response to Business A.M. questions, Azubeze Adogu, a clinical professor of kidney diseases and transplantation in Athens, GA, United States, said:
“The CBN Act is full of holes and confers too much power on an absolute potentate, unlike in America where there is an actual Board with a chairman removed from the political process. Every CBN Governor since Clement Isong has lived beyond his means, Soludo and Emefiele being the very worst. The day Emefiele tried to run for president should have been his last day as CBN governor. His suzerainty over commercial banks is unseemly and prone to corrupt conversion.
“His office should be separated completely from the executive: he has no business at Aso Rock for any reason under the Sun. He should be as removed as the Chief Justice in a democracy.
“To pick up the right candidate, the CBN Act must be changed. Recruitment should be international, not limited to Nigeria. The right candidate must have a qualification in economics and a broad understanding of fiscal policy, not necessarily banking. Ditto for chief Justice, Inspector General of Police, and I might add, Chief of Defense Staff. What we presently have is a cult of mediocrity, the worst of the country in leadership,” Adogu added.
Peter Umoh, a professor of finance and current deputy vice chancellor (Academic), Baze University, told Business A.M. that he hopes that a qualified person can be appointed to be the governor of the CBN.
“On the CBN governor, I hope we can appoint a qualified one while avoiding the mistakes of the past. Hitherto, CBN governors had been appointed on recommendations of interested parties without formal interview. It is necessary to shortlist some qualified candidates and subject them to some assessment. The most promising should then be recommended for appointment.
“In the recent past, governors had been practising commercial bank CEOs (except Prof Soludo). Nigeria is the only country I know doing that. Appointing a commercial bank CEO to regulate and supervise the activities of his colleagues in the banking sector is fraught with obvious problems. In most climes, governors are renowned economists in academia or industry with proven track record of performance and with strong interest in economic development. I have no doubt we have many qualified men and women who can do the job creditably,” Umoh said.
Umoh and Uwaleke, a professor of capital markets and president, Association of Capital Market Academics of Nigeria (ACMAN) share a similar view on how the search for Emefiele’s replacement should proceed.
“In my view, the possession of an Economics degree is only a necessary but not a sufficient condition. The next candidate for that position, given what the job entails, should not only be a seasoned Economist but also an experienced Banker (former MD of a Bank at the minimum) who has headed a Regulatory Institution in the financial system.
“This is because the CBN Governor not only supretends monetary policy but also financial system stability. In this regard, the President will be well advised to put a round peg in a round hole,” Uwaleke said in closing.