President Buhari is torn between sacking Emefiele and sending the economy into a tailspin. It's a tough call
However, Emefiele would be the first to admit that he’s failed woefully at that job.
On the sidelines of a CBN Foreign Exchange (Forex) policy dialogue which held in Lagos recently, resource persons and prominent private sector stake-holders complained to Pulse about how the monetary policies of the CBN under Emefiele have eroded investor confidence, created uncertainty in the market and left the lot of the citizenry in dire straits.
Renowned economists like Bismarck Rewane and Ayo Teriba warned the CBN to stop rigging its own Forex market.
The CBN has been at pains to explain whether it's operating a float or a devaluation.
A few days after that Forex policy dialogue which had the Adviser to the CBN Governor, Emmanuel Ukeje in attendance however, CBN commissioned DSS (Department of State Services) personnel to raid Bureau De Change outlets in Lagos in a bid to force the value of the Naira to appreciate against the Dollar--proof that old habits die hard.
"We should be wary of absolute devaluation", said Ukeje, "we are operating a foreign exchange rate that is managed".
Most financial analysts have described the CBN commissioned DSS raid as primitive and draconian. The exchange rate has only worsened since the raids, with traders now hoarding Forex.
But if Emefiele and his CBN staff have learned anything from forcing the exchange rate, they are yet to show it.
Bankers spoken to for this story lament that the CBN under Emefiele has driven the economy under.
Emefielemustgo.com--a website opened by anonymous Bank executives, has since gone viral. Its main mission: to pile pressure on President Muhammadu Buhari to dispense with the services of Emefiele.
According to the website, Emefiele stopped influx of much needed Forex into Nigeria through Standard Chartered Bank, but allowed the same Forex into the country through Zenith Bank; Emefiele’s last workplace address; at a cheaper rate.
Standard Chartered was immediately sanctioned by the CBN Governor after the bank went ahead with another transaction without first calling to inform Emefiele.
According to Emefielemustgo.com:
“This was where Standard Chartered entered Emefiele’s trouble. They called one of their foreign clients to arrange a $25m transaction at N380 to $1. They quickly bought it and then sold all the $25m to various Nigerian clients at N380.50 to $1. This is because Emefiele has another rule that banks must not charge more than a spread of 50kobo on forex deals. But typical of Emefiele, he allows some people break this rule!
“The $60 million that Zenith Bank purchased from ICBC at N390 to $1 was sold to a Nigerian client at N420 to $1! Emefiele allowed them to do this and he also allowed them not to put the transaction in the Reuters system.
“Standard Chartered then committed another offence according to the rules of Emefiele. They updated the $25 million transaction in Reuters. This means that Reuters then showed that rates on the interbank market were going up. They also did not call him for approval before doing the deal.
“These two offences made Emefiele very angry so he immediately wrote Standard Chartered a letter (we have seen a copy of this letter) asking them to explain themselves. He immediately debited their account with a N1.7bn fine (Please note that the profit that they made on the deal was N12.5 million!). He also asked them to suspend their Chief Treasurer. Standard Chartered have placed the Treasurer on suspension as instructed”.
Presidency sources have told Pulse that Buhari hasn’t axed Emefiele yet because he doesn’t want to create more panic and crisis in the market.
But according to some of these sources, Emefiele's cup has since spilled over.
The President is also wary of sending the wrong signals to foreign investors by sacking his CBN Governor.
“Buhari really wants him to go”, said one top ranking Aso Villa source who craved anonymity for this story, “but with the economy already on its knees, the President is in a Catch-22 situation”, offered the source.
"Buhari doesn't want to come across as interfering with the affairs of a Central Bank that should ideally be independent".
The President is also mindful that he has to go through the Senate to sack the CBN Governor, the source added.
“It’s a bit of a long process for Buhari at this time”, said another Villa source. “He can sack Emefiele but only with the approval of the National Assembly. That will take time and so much debate which could also negatively affect the economy in the short term.”
Pulse put calls through to Adviser to CBN Governor, Ukeje, for a response to this story, but there went unanswered.
Calls placed to the phone lines of Presidential spokespersons Garba Shehu and Laolu Akande, were also not picked nor returned at the time of heading to press.
Emefiele's term as CBN Governor will be up in 2019--the year Nigeria heads to the ballot to choose a President.
He was appointed to head the apex bank in June of 2014 by former Nigerian President, Goodluck Jonathan.