Nigeria's new president is starting to find answers to the country's economic problems

Author: Niyigena Antoine
On:14/06/2023 13:45
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Lagos, Nigeria Last week the new President of Nigeria, Bola Tinubu, suspended the governor of the Central Bank of the country, Godwin Emefiele for questioning on why poverty is affecting the country.

A story published by Aljazeera said that Godwin Emefiele' suspension has not yet been announced because the charges have not yet been made public, but a government statement said investigations into Godwin Emefiele's office are ongoing, even the planned reforms in the financial sector of the economy as reasons for the suspension. 

Godwin Emefiele was appointed in 2014 by then President Goodluck Johnathan to head the central bank of Africa's largest economy. 

Emefiele became the second longest serving governor of the bank after his tenure was renewed by former President Muhammadu Buhari. He was now one of the most powerful men in Nigeria. 

Buhari's administration between 2015 and 2023 led Nigeria in two terms. Inflation has hit an 18-year high of 22.22 percent, and the national debt profile has risen to $150bn, the Debt Management Office says and more than three times the debt left by the previous government. 

Emefiele served under Buhari for eight years, overseeing Nigeria's troubled economy. He had no vision for the country's monetary policy. 

He rose to the top of his profession and was placed in a high position. At the convention, central bank governors operate in the shadows, maintaining political distance. But analysts say that Emefiele played a significant role in politics and economics as the governor of the 'Apex' bank. 

People were not sure about the policy direction on the exchange rate. The currency has continued to increase year after year and continues to lose value; statistics show that Nigerians have become poorer. About 133 million people of the country's 220 million populations are now living in extreme poverty. 

Here the poor have less access to education and basic infrastructure services, according to a 2022 report by the Office for National Statistics. 

External factors such as the COVID-19 pandemic and the war in Ukraine have undoubtedly affected the economy and contributed to the devaluation of the currency. 

But the central bank's monetary policy stance also pushed inflation down from a single-digit growth rate of between 6 percent and 9 percent in 2014, analysts say. 

Emefiele's CBN has loaned the government 22.7 trillion naira $49bn based on the borrower's clause and advisory mechanism that can be applied if the government is facing a temporary cash crunch. 

In addition, the CBN law only allowed for the borrowing of five percent of the government's revenue for the previous year, but the bank has been illegally defaulting every year, sometimes up to 30 percent. Experts say that this contributed to the devaluation of the currency. 

At the end of President Buhari's tenure, the National Assembly amended the law to allow the government to borrow up to 15 percent and convert the loan into a 40-year loan. 

When thousands of young people took to the streets to protest police brutality in October 2020, the central bank ordered the freezing of the bank accounts of elected protest leaders without a court order. 

His use of money is heavily criticized. Earlier this year, the governor overturned the multi-religious plan in the run-up to the general election, scrapping the old currency for six weeks. 

The official reasons were to bring back excess money from the banking system and to introduce a cashless system. The CBN has launched its digital currency, the 2021 e-Naira. 

With elections around the corner, the decision to launch the e-Naira was taken as a political one. Government’s officials said the move would undermine the hoards of money they believe is in the hands of politicians to use to mislead voters. 

Emefiele was suspended only while an interim successor was appointed in his place, there is hope that the apex bank is planning new strategies to ensure that the currency regains its value. 

Nigerian currency had already depreciated the next day.

Author: Patience Muhoza

Translator: Antoine Niyigena