CBN Vs NESG: Waving the white flag

On Monday, September 7th, 2020, the Nigerian Economic Summit Group (NESG) published a press release titled “Matters of Urgent Attention”, in which it x-rayed the state of the national economy and expressed a number of reasoned concerns over the poor state of performance of some of the critical economic indicators affecting the country.

Treatises like the release have become, for several years now, a common feature of the country’s dialogue on the economy. They serve an extremely useful purpose because these publications permit individuals and organisations that embark on this course, not only the opportunity to ventilate important, topical, subjects in the widest possible manner but also to enable those views to come to the attention of several organs of governance responsible for policy formulation and implementation. It is also the case that the reaction to these exercises would often be gauged by the credentials of the author whose antecedents will, typically, determine the depth and appreciation of the reading audience. 

That thermometer reading, therefore, is dictated by the credentials of the author.  The more accomplished; the greater the interest in the contents. This, it appears, is what happened following the public circulation of the NESG press release. The Nigerian Economic Summit Group (NESG) is a private sector-led think tank that was incorporated in 1996 as a not-for-profit organization to promote economic reformation and policy advocacy that positions the Nigerian economy for sustainable growth and global competitiveness. For 24 years, it has provided a platform for bringing together private sector leaders and senior public sector officials to collaborate and dialogue on the imperatives of deepening the Nigerian Economy. Comprising some of the most influential economic and financial actors outside the government, its views, in the past and now, have conveyed some of the most incisive commentaries on the economy of Nigeria. As such, it has become very highly respected.  Understandably, therefore, its comments were always likely to attract both attention and comment with all kinds of flavours.  

The Press Release, importantly, commended the efforts of the Federal Government at creating short term jobs across all facets of the economy as well as recognized the willingness of the Federal Government to work with the private sector in the design and implementation of national economic development plans. In addition to calling for re-evaluation and re-tooling of the country’s security architecture to address the dire challenge of in-country insecurity; raising the emphasis on reopening national borders because of the negative impact its protracted closure has had on the free flow of legitimate trade among sub-regional economies, NESG’s analyses touched on various policies, decisions and actions of a number of other key national institutions, including, majorly, the Central Bank. It expressed deep concern with what it described as CBN’s opacity in managing foreign exchange transactions; loan disbursements regarding its special purpose monetary interventions, and price-fixing without providing adequate clarity on policy objectives; trends and practices which are not in tandem “with evolving developmental roles of central banks around the world especially as it concerns resource allocations’’. 

Fairly swiftly thereafter, NESG also published a letter it had written to the President, in which it specifically raised issues with some of the provisions of the bill for an Act to repeal the Banks and Other Financial Institutions Act (BOFIA) 2004, and to re-enact it and other matters connected therewith, 2020. Although the BOFIA Act has been 29 years in the making, it had been recently passed by both houses of the National Assembly and was awaiting presidential assent when NESG appealed to the President for intervention. NESG ‘s contention was, among other things, that certain proviso’s in the amended Bill, if not “deleted or amended, may be inimical to the fulfillment of the mandate of formulating and implementing policies and programmes which attract foreign and domestic investments”.

Among other issues, it highlighted specifically, sections 2(5) (a) and (b), 12(6) and 57(1) and (2), which, respectively, extends CBN’s regulatory oversight outside the scope of “banking business”; grants it immunity from restorative orders and promotes overreaching by the Central Bank. NESG concluded that these policies and interventions if assented to by the President as it is, over-regulates the economy and give sweeping powers to the CBN Governor, which are prone to abuse. The CBN, in its well-publicized response debunked the claims made by NESG, and in defense of its economic policies over the last 5 years explained that “access to credit is listed among the three major challenges faced by farmers and businesses in Nigeria”, hence, it was vital for it to “address an area that it had sufficient ability to impact upon, while the Federal Government seeks to address issues such as access to electricity and logistics”. On the allegation that its lending process is devoid of a proper framework, it stated that recipients of intervention funds from CBN go through an “extensive” due diligence process supervised by participating financial institutions (PFI), followed by an additional assessment process by the CBN before disbursements are provided.

However, in its response, the Central Bank resorted to the use of vitriolic, derisive and even contemptuous language that, almost regretfully, personalized a hugely important dialogue.  It was language that, potentially, may have caused the CBN to dip below its exalted status as a foremost regulatory institution in Nigeria. Aside painting NESG as an irritant, CBN’s argument may have recorded limited success in fully addressing the concerns raised. Whilst the CBN has every right to defend the integrity of its policies against what it perceives as an “ignorant or malicious” attack and false claims by the NESG, the comportment and communication of the response present a cause for apprehension, especially, given the gravity of the issues at stake.  With most economic indicators pointing southward; rampant and widespread insecurity in the midst of insurgency; domestic and international terrorism; banditry and proliferation of arms which has led to softened sovereignty in some parts of the country; endemic corruption; runaway inflation: poverty and illiteracy; food crisis and insecurity; burgeoning unemployment; community clashes with an attendant rise in brigandage and carnage; needless to say, the fault lines of our nationhood have never been more barely exposed as they currently are. 

Our depiction as the “poverty capital of the world” is because millions of our citizens continue to wallow in despondent poverty and disease over the effect of some of the negative consequences of the economic policies about which NESG – and, it has to say, many others before them – have spoken to. 

What appears to have now transpired is that important and crucial dialogue about the quite serious problems we, as a nation, are now confronted with, ran the unfortunate risk of being “diverted” and supplanted by a “collision of intellectual egos”. To be clear, we, the National Association of Seadogs, Pyrates Confraternity do not believe that to score points, it is permissible to rely on assertions that are either flawed or outrightly untrue.  Nor do we consider that it is acceptable – or permissible – that the reading audience should be misled by self-serving or manipulated interpretations of issues being discussed.  To the extent that these postures exist in any of the respective parties’ public explanations, we demur and deprecate such conduct and commentary.  That said, we maintain the view that NESG and its members, in their capacity as an economic and policy advocacy body, reserve individual and collective rights to comment on matters of the economy; directly criticize and express a contrasting opinion about the policies and interventions of the Federal Government and, or its agencies, including the CBN.

The resignation of Chief Executive Officers (CEOs) of 3 prominent Nigerian banks from the Board of NESG coincided uncomfortably with the emergence of these differences between NESG and CBN. Whilst it appears that there may be well-informed reasons for the CEOs actions, it is only logical that there may be those who will see this as having occurred, not without certain influence or pressure connected with sentiments arising out of this situation. 

As Nigeria’s apex banking and financial regulatory institution, CBN must be mindful of its utterances and comportment, as its body language may inadvertently create an environment that censures instead of extracting value from opposing views, ideas, and counsel. We are not insinuating any direct link between CBN, NESG, and the resignations, but the enormous regulatory and other powers it wields over banks and the speed at which the resignations were effected creates an inescapable wireless connection between the two. These kinds of rancorous conduct, which are inimical to deliberate knowledge integration and management to deepen policy responses, must be avoided in the future. It is critical that the strangulating poverty which threatens average Nigerian families today does not drown in the sea of rhetorical vitriol. Like all very anxious and concerned Nigerians, we are entitled to – and expect – constructive engagements that will lead to the enactment of economic policies that create production-based jobs so the national economy can grow sustainably. As Nigerians face up to what is likely a fresh round of recession, all stakeholders in the economy must come together to ensure that our economic recovery plans are well thought through, backed by empirical data.

The CBN should muster the humility to admit the fact that some of its policies have failed to deliver the expected outcomes and rather than create more jobs, have made the economy more atrophied; impoverishing more Nigerians than it has lifted out of poverty.  We hereby call on the Federal Government; CBN, NESG, and other well-meaning institutions and stakeholders in the country to focus their energies on activities and commentary that galvanize the immense intellectual capacities that are available to the country to enact policies and intervention that provides very desperately needed socio-economic relief and support to long-suffering Nigerians.  Nigerians need jobs, not invectives!

Owoaje wrote from the National Association of Seadogs, Pyrates Confraternity.