CBN Had Disastrously Incompetent Leadership Under Emefiele – Says Moghalu

Former Deputy Governor of the Central Bank of Nigeria, CBN, Prof Kingsley Moghalu, has said that the apex bank in Nigeria suffered disastrous incompetent leadership under Mr. Godwin Emefiele.

Prof Moghalu said, “I find, in the management of the economies of African countries, that central banks (responsible for monetary policy and also, frequently, for financial and payment system regulation), often perform far better than the fiscal policy organ (Ministry of Finance)”.

“There are exceptions, however: while Nigeria’s Central Bank of Nigeria has broadly performed well under various Governors, including the current one, it had disastrously incompetent leadership under Godwin Emefiele, which contributed heavily to Nigeria’s subsequent economic woes.”

“Why? Because Emefiele was more of a political poodle than a real central banker. The notion of central bank independence was utterly foreign to him. All the late Muhammadu Buhari’s presidency had to say was “Jump” and he would ask: “How High?”. That’s why he printed about 30 Trillion Naira in illegal Ways and Means funding of the fiscal authorities. In the end, like Nza the bird in Chinua Achebe’s Things Fall Apart who, after a hearty meal, challenged its “chi” (deity) to a wrestling match, Emefiele attempted to move straight from the central bank to Aso Rock as President without resigning from a public service post, and ended up unenviably.”

“Ngozi Okonjo-Iweala on the other hand, performed superlatively as Minister of Finance. Why? Not only was she a competent and experienced professional before she came to the role, she possessed a pedigree and gravitas that to a large extent inoculated her from the problem that produces “fiscal dominance” – the influence of politicians on the fiscal functions of taxation, budgeting, and borrowing. It was not easy for politicians to dominate her because the Presidents she served respected and empowered her, and she put certain conditions on the table on each occasion before accepting the role.”

“Central banks, on the other hand, have tended in most countries of the world to have statutory institutional independence that prevents or at least restrains interference from political masters. Politicians in Africa (but not only in our continent😀), tend to view central bank independence with great suspicion and unease. The thought of an institution that’s not at the beck and call of a head of government is anathema to most politicians except in truly mature polities. Thus, politics eats economics for breakfast.”

“The upshot of all this: central banks in Africa often labor like the Greek mythical king Sisyphus, who was condemned to rolling a huge boulder up the hill but could never tip it over to the other side because it kept rolling back down. While they work, politicians “scatter”, constraining the possibilities for overall macroeconomic management and economic transformation. It takes a combination of strong independence of a central bank and strong influence of the finance ministry function to reign in politicians with itchy fingers for borrowing and profligate spending, which creates many problems including inflation.”