How Emefiele’s Warning To Banks Is Curbing Money Politics And Helping The Naira
This is indeed an interesting time in Nigeria political landscape, though not in terms of the usual glamour and razzmatazz of the political gladiators or even their manifestos, but the fact that influence of Naira and Dollar rain has abated. The lamentation is quite loud, and deafening among politicians and their hangers-on.
Money in politics did not start with the current democratic dispensation, it predated it. But Nigerians never bothered about the effect it has always had on the economy each time we are about to go to the polls on the economy. The huge spending and other associated fears in an election period had in the past affected the economy negatively, causing capital flight, inflation, and made investors to run away. The consequences of the huge spending during the 2015 general elections were obvious, it wrecked the economy, weakened the Naira, caused stagflation and eventually, the economy slipped into recession. Unfortunately, nobody seems bothered or ever asked how we got there.
We are in another season of politicking and elections; must we ply the same route this time around? Though the economy is out of recession, yet it is still fragile, and if we are not careful, Nigeria may slip back. This is the reason why the ‘voice of a lonely one in the wilderness’ is crying loud and warning again as he did before the economy went into recession, about likely huge spending in the forthcoming general elections. That Nigerians and the international community are wondering why there seems to be a lull in the political terrain is not far-fetched, – Godwin Ifeanyi Emefiele has spoken again!
However, this is not to say money is not being spent, but it is not flagrantly seen to be spent as was the case in the past. What we are witnessing now is a purposeful effort of one man bent on changing things. When he started his revolution he was called ‘clueless and confused’ and Nigerians asked for his head, but today even his prolific and acerbic critics, among them professors, financial technocrats et al, have all buried their heads in shame with no option than to commend him.
When he suspended 41 items from the inter-bank forex window and introduced the Anchor Borrowers’ Programme (ABP), Nigerians were ‘mad’ at him. They called for his sack, and held him responsible for anticipated economic woes, but today, Nigeria that used to be a net importer of 1.2million metric tonnes of rice from Thailand in 2014, now import a meagre 6,000metric tonnes as at January 2019.
When he commenced strategic intervention in the forex market to arrest the enterprise of speculators who were on rampage attacking the Naira, he was heckled, and today we have stability in the forex market, exchange rate is stable and Naira is gradually gravitating towards its real value. It is just that Nigerians do not recognize and commend achievements. Despite CBN weekly interventions in the forex market, Emefiele has not ceased to build reserves which currently stand at $43billion.
The 2015 general elections were the worst in terms of use of money in politics. The relics are still visible. This piece is not to tell stories of the role money has played in Nigeria politics, but of a saddening role some deposit money banks play in Nigeria politics. Banks now approach politicians, offering them loans to fund their campaigns, and requesting that after the elections politicians could pay back the loans with interest and of course patronage. At least this was confirmed by a former governor from the South West who after winning the 2014 gubernatorial election in his state came public to tell Nigerians how bank managers approached him to take loans to fund his campaign. We also witnessed how loads of ‘Ghana Must Go’ bags with both local and foreign currencies were ferried across the country to canvass for votes.
There was also the case of a former chairman of a liquidated bank who in 2015, prior to the elections personally donated the sum of N1billion to the campaign purse of a presidential candidate and another N2billion on behalf of his unnamed friends. That bank became distressed and was eventually liquidated, and currently in the custody of an ‘undertaker’. He fiddled with depositors fund channeling it into an unproductive venture.
The issue of deposit money banks offering loans to politicians accounted for part of the non-performing loans in the banking sector today, and this may have been the reason why Godwin Emefiele, the Governor of the Central Bank of Nigeria, on November 22, 2018, at the Bank’s last Monetary Policy Committee (MPC) meeting for the year sounded a strong warning to deposit money banks in the country not to succumb to temptation of lending without conducting sufficient risk assessment nor violate the Money Laundering Act. Emefiele warned that unpalatable consequences await any defaulting bank over careless lending to politicians and other violations.
And to ensure that the banks comply with his directive, Emefiele said “We have had meetings with the banks and we have told them to be wary. Money laundering issue may arise and we have advised them to be very careful on that. I believe they will be careful because they have been told that if they are caught on money laundering, they will be heavily penalized”.
Let me also quote him on lending to politicians when he said, “of course, when you say banks’ lend to politicians, banks have their acceptance criteria and I don’t think that banks will do that at this time. Everybody must have learnt their lessons and I believe the right thing for everybody is to conduct their businesses carefully. But we as Central Bank, we are staying behind and watching to make sure that when things go wrong or about to go wrong, we will deal with it appropriately”.
Emefiele’s warning may have indeed stemmed what we witnessed during the 2015 general elections where money was used indiscriminately to the detriment of the economy. The political space was monetized, foreign and local currencies were used to canvass and bribe for votes. This gravely affected the Naira and it was terribly battered. After the elections the consequences were obvious, the economy went under and inflation galloped. The exchange rate went up as high as N525/$1 but for the prompt intervention of the Central Bank of Nigeria that reversed the trend.
This timely warning is indeed working the magic thereby complementing the anti-corruption posture of the Buhari led-administration and the warning from the electoral umpire, INEC, admonishing politicians to adhere to campaign spending rules and threshold.
It is thus not surprising that the political turf has been so calm, unusual and looks uncertain. Is Godwin Emefiele replicating the calmness and sanity he brought to the currency crisis of 2016/17 in Nigeria’s political life? Time will tell.
Adetunji Otitiloju, is a public commentator from Ekinrinade, Kogi State.
