Martins, a Lagos-based finance professional, spotted an opportunity to scale the family’s cassava farming business. He had always known that there was a big market for cassava, if only he had access to finance to expand production, which had been limited to a small area of cultivation in Ibadan, Oyo State.
Nigeria accounts for one-fifth of global cassava production, but still has the supply-demand gap for High-Quality Cassava Flour of 485,000 metric tonnes (MT) per annum and the gap for cassava starch is about 290,000MT, according to PwC. In 2021, the government estimated that cassava products could earn Nigeria $18bn annually if fully harnessed.
Buoyed by the government’s agriculture policy, which revolved around self-sufficiency, Martins applied for a CBN agriculture grant, but after waiting for almost two years, he finally accepted that it wasn’t going to come. He concluded that his application was probably not good enough.
“If the reports are true, people may start to think some stakeholders aim to reap politically from their popular initiatives and this is not good,” says Martins. “The CBN is meant to be neutral.”
A number of support groups have been campaigning openly for the apex bank governor. The crescendo was at the convention of the governing party, the All Progressives Congress (APC), where his supporters displayed posters urging people to support his bid to get the top job in the country.
On 28 February, the CBN governor’s first-ever post on Twitter was to debunk a report by local media, Sahara Reporters, that the governor had brought in three aeroplanes and earmarked over N500bn ($1bn) for his presidential campaign. He called it fake news. Towards the end of March, he also posted tweets saying that he had no interest in the presidential race.
We do not do politics at the Central Bank of Nigeria. The governor has said it several times. That he should not be distracted.
“My focus at this time is a robust monetary policy and fighting inflation which is now a global problem; building a strong financial system in an increasingly uncertain global economy…” he said.
Despite this, many support groups are unyielding. They continue to hold rallies and campaign in branded vehicles. This has elicited stiff criticism from Nigerians and the opposition People’s Democratic Party (PDP), which has called for his resignation and an investigation into his alleged connivance with “cabal in the APC administration” to, among other things, operate a “special fraudulent, corrupt and discriminatory foreign exchange regimes for APC leaders to fleece our nation”.
In an exclusive chat with The Africa Report, the CBN’s Director of Communications, Osita Nwasinobi, emphatically says the central bank is not interested in politics and was not behind the campaign.
“We do not do politics at the Central Bank of Nigeria. The governor has said several times that he should not be distracted. The central bank is an institution of the country, we serve any government in power, and we do not do politics,” he says.
The implications debate
However, there is some evidence to illustrate the overlap between fiscal and monetary policymaking, given that the CBN has ignored the 2007 CBN Act – an act put in place to ensure the integrity of the monetary institution – several times.
According to Atiku Samuel, a public policy expert at the International Budget Partnership, Emeliefe has crossed the line into monetary policy by printing money on the government’s demand and making repeated incursions into the fiscal policy space.
Another issue that he thinks highlights the bank’s dependence and camaraderie with political actors is how the CBN froze bank accounts of young protesters during the #EndSARS agitations against police brutality.
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For Samuel, this suggests that the country has a central bank that could potentially be drawn in to clamp down on opposition. “Who wants to keep their money in a bank when they know it can be frozen if you get into the black book of the government?” he says.
Moreover, Samuel says the governor’s performance should bring into question his ability to be a political leader. “Foreign exchange policy has been a disaster; inflation management has been horrible; integrity of the banking system is in comatose, and monetary policy management has been abysmal.”
How can a CBN governor be positioning [himself] to become the president while still occupying the position?
He wonders why people suffering because of poor economic management will suddenly begin to praise the people responsible. For context, he believes that poorly executed monetary policy by the bank is one of the major reasons for the loss of 23 million full-time jobs since 2015.
“Never has the institution of the CBN been this rubbished. How can a CBN governor be positioning [himself] to become the president while still occupying the position? Even China takes its monetary policy seriously because they understand that the economy collapses once the people lose faith in it. If the opposition wins the election, he will have to be removed,” he says.
Dr Adebayo Adedokun, an economics lecturer at Obafemi Awolowo University, argues that although the process that produces the CBN governor may have some influences from political actors, CBN’s monetary policy by design is meant to be independent of political influence and to check fiscal policy. However, he posits that nothing untoward has been done.
“Just like many countries across the world, the CBN and the fiscal policy authorities have embarked on an expansionary policy drive, essentially running a deficit by spending more than they earn because of the Covid-19 pandemic,” says Adedokun.
He believes that if any, ulterior motives are negligible in this case as that was what the economy needed to deal with the shocks and navigate through recession.
Analysts have already argued that the CBN is increasingly viewed through a political lens, given how monetary policy often reflects and supports fiscal policy. Over the years, while the president has campaigned to maintain the value of the Naira, the central bank has agreed.
When certain imports were banned to shore up FX in the country, the central bank agreed with the government’s strategy.
“People see political influence within the bank’s programmes over the last six years,” says Samuel. “For example, because the Anchor Borrowers’ Programme is concentrated in the north, people can infer that it is a way to get the electorate there to vote for him whenever he decides to contest.”
The Anchor Borrowers’ Programme is a CBN initiative to boost agriculture production by providing loans to smallholder farmers or linking them to companies (anchors) involved in the production and processing of key agricultural commodities.
Dr Adedokun disagrees, saying he knows at least 10 ordinary young people who have benefitted from CBN’s Covid-19 packages. For him, the governor should only be removed if he taints the image of the institution by declaring without resigning as that will have adverse effects on the economy.
The economy can collapse!
Both experts agree on the effects on the bank’s institution and the economy. It is a question of if these effects can be triggered by the mere speculation that the governor wants to contest or by his actual declaration especially while still in office.
The underlying question will then be if there can be smoke without fire. Why are people not asking the heads of the Economic and Financial Crimes Commission (EFCC) or the National Drug Law Enforcement Agency (NDLEA) to contest, if there is no stimulus of some sort?
Samuel thinks this is as bad as having people display the campaign posters of the current Chief Justice of Nigeria during the ruling party’s convention. Only that the consequences, in this case, are far-reaching as Nigeria’s “trade policies with over 120 countries and the entire banking system” rest on the integrity of the CBN. “The economy can collapse!” Samuel says.
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