CBN boss Emefiele’s sweeping gesture

Nigeria’s new central bank governor, Godwin Emefiele, who has stepped into the hot shoes of his predecessor, Lamido Sanusi, has made his presence felt in no uncertain terms. He has scrapped some of Lamido’s key policies but other reforms have run into stiff opposition. Frederick Mordi assesess Emefiele’s first few months in office.

The new governor of Nigeria’s central bank, Godwin Emefiele, has been carrying out a silent revolution within the institution since he assumed duty on 2ⁿd June this year. He has made some decisions that have jolted quite a few stakeholders in the economy.

One of his first acts was to reshuffle the bank’s deputy governors. The erstwhile deputy governor, corporate services, Suleiman Barau, was moved to operations, while Dr Kingsley Moghalu, formerly in charge of operations, now heads the financial systems stability directorate, a position previously occupied by Adebayo Adelabu, currently deputy governor, corporate services. The aim of the exercise, it seems is to concentrate minds and streamline internal operations.

However, the only top female director in the bank, Dr Sarah Alade, retains her position as deputy governor responsible for economic policy directorate. Alade had been acting governor of the bank since February this year, following the unceremonious suspension of her outspoken boss, Lamido Sanusi, now Emir of Kano.

Emefiele, a former managing director and chief executive of Zenith Bank Plc, who is perceived to be highly conservative – an essential quality which some analysts say is required of a central bank governor – has said he will create an institution that is professional, apolitical and people-focused.

Emefiele appears to have taken a swipe at some of the policies that his colourful predecessor had initiated. One of these was the imposition of handling charges on cash withdrawals and deposits, and he has directed all banks to stop imposing charges on cash deposits.

The ‘cashless society’ policy, which his predecessor, Sanusi, introduced in 2012, had imposed cash handling charges on daily cash withdrawals or deposits above certain limits – N500,000 ($2,941) for individuals, and N3m ($17,647) for corporate bodies.

The idea behind the policy, introduced in 2012, was to reduce the amount of physical cash (coins and notes) circulating in the economy, and to encourage more electronic-based transactions (payments for goods, services and transfers). Another aim of the policy was to modernise the payment system in line with Nigeria’s goal of ranking amongst the top 20 economies of the world by the year 2020. However, Emefiele has suspended the policy, which is now undergoing a review due to its apparent shortcomings.

He said: “Over the course of the pilot, we have become aware of complaints by customers particularly regarding the charges being imposed for cash deposits. This has resulted in customers devising various means to avoid the charges through opening a multiplicity of accounts and other disingenuous behaviour all aimed at undermining the objective of this policy.

“Given these outcomes and to better reflect our goal of having more cash under our control, all charges on deposits are hereby stopped with immediate effect.” However, at the time of going to press, charges and limits on daily cash withdrawals remain in place throughout the country.

This was welcomed by customers who complain that the banks impose excessive charges on cash deposits. This had forced some of them to devise ingenious ways of dodging these charges through opening multiple accounts.

Emefiele has also turned his attention on the numerous Bureaux de Change (BDC) firms in the country. He announced a new minimum capital requirement of N35m ($205,882) for operators, up from N10m ($58,823). Justifying this rise, he said the capital requirements for the BDC dealers had remained unchanged over the years, while those for all other central bank-regulated entities, particularly the banks, had been reviewed upward.

The decision to streamline the operation of BDCs, he added, was taken because of the need to check inefficiencies in the system and eliminate alleged sharp practices in the foreign exchange market that have led to the depletion of the nation’s external reserves.

But operators have mounted an intense lobby at the National Assembly in Abuja to pressurise the central bank to reverse the new policy. Acting president of the Association of Bureaux de Change of Nigeria, Aminu Gwadabe, warned that the policy would aggravate the high unemployment rate in the country, should it be implemented.

He said: “We appeal for the total reversal of the policy because it will force many of our members out of the market. The 100% increase in the mandatory cautionary deposit will further boost the black market segment of the economy and the return of exclusive group ‘A’ BDCs.”