Governor finds long term solutions
Succeeding a respected and dynamic leader of any powerful institution is never easy but Godwin Emefiele has done a fine job since taking the reins from his predecessor Muhammadu Sanusi in 2014.
From a personal perspective his original appointment could hardly have come at a worse time. Economic output increased 6.3% on an annualised basis the year of his appointment. The next year it grew by just 2.7%; in 2016, the economy fell into recession, assailed by soaring inflation and slumping oil prices.
But rather than panic Emefiele sought long term solutions rather than quick fixes. He kept rates high with the aim of taming inflation, which peaked at 18.7% in January 2017. His overwhelming priority has been to maintain a strong naira with the aim of boosting growth — economic output is projected by the IMF to expand by around 2% through 2023 — while reducing inflation into the single digits, promoting economic stability, boosting investor confidence and promoting inward capital flows.
THE MULTILATERAL VIEW
That single-minded ambition has irked some global policymakers, particularly at the IMF and the World Bank, both of which have urged Emefiele and President Muhammadu Buhari to allow the currency to devalue and to lower the benchmark rate, which has held steady at 14% for nearly two years.
Yet analysts have praised Emefiele’s determination to keep the currency stable and strong and prices low. Razia Khan, chief economist for Africa and the Middle East at Standard Chartered, said foreign exchange stability was of “paramount” importance to the west African state. Emefiele’s readiness to stay the course gained further credence when inflation ticked up in September 2018 for the second month in a row having bottomed out in July at 11.14%. If anything, the mood within the central bank following the latest Monetary Policy Committee meeting in September was inclined toward seeing interest rates rise not fall if prices continue to head north.