CBN boss Emefiele’s sweeping gesture - African Business Magazine
CBN boss Emefiele’s sweeping gesture

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.”


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Written by Frederick Mordi

Frederick Mordi has about 15 years experience in journalism, communications consulting and corporate communications. He holds an MSc in Media and Communications from the Pan-Atlantic University (the parent institution of the Lagos Business School (LBS)).

A versatile writer and blogger, he won the Commonwealth Award for Short Stories in 2004. He is currently the Internal Communications Lead for Dangote Group.

  • Sholay

    I must confess that i am very ecstatic by this piece when i went through it, but I will like to emphasis that an average Nigerian has no knowledge of how much they can gain from financial institutions to enhance their businesses and exactly how they can go about it. The benefits of these product must reflect not only with the elite but also with the common man in business to enhance their well being. Nigeria has the potential to make this country one of the financial stronghold in our recent time, but the problem is education, awareness followed by proven results. An average Nigerian running a business does not understand the potentials and products available to move their business forward.
    Servicing their financial obligations from any financial institution should be structured to enhance growth and availability of funds in future when required. Good Credit rating should be emphasized to create awareness in defaulting with your payments, availability of data and sharing of credit file should be strongly emphasized and implemented by making this a Public-Private-Partnership operation without monopoly by any credit rating establishment and these should be used by the financial bodies to provide these products to mitigate risks.
    MSME is a vital part in any economy looking for future growth, the more funds available for the sector is a good thing, it will increase revenue for the financial institutions and create more jobs thereby enhancing the CPI in the nation through a vibrant economy. I will like CBN to encourage more financial and investment companies to register with a controlling body with guidelines on the mode of operation to produce the expected result. There are many ways of enhancing your wealth and all these products should be introduced to customers.
    As diaspora with good financial background and on the verge of coming home, I would like to emphasis that the skill and knowledge required to meet these standards are available, we need more structured and fulfilling approach to meet this very vital part of our economy. I pray that CBN continues to move in the right direction and keep creating awareness of the benefits of working with financial institutions to enhance our businesses through seminars, conferences and strong advertisements.

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