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Published On: Thu, Feb 27th, 2014

Memo to Godwin Emefiele

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By Boniface Chizea

My brother, congratulations are very much in order! When our paths crossed in the early 1980s when you led a team of students on a visit to United Bank for Africa; when I was then the Manager, Strategic Planning with responsibility also for Commercial Research and Investigation Unit, none of us could have guessed that I would ever have the opportunity of sending you this open memo on such auspicious and marvelous occasion of your appointment as the Governor of the Central Bank of Nigeria; the number one banker. It is the Lord’s doing and it’s marvelous in our eyes. The President also deserves to be congratulated for good judgement in making this appointment. Often not many people give credit to the President on the quality of the appointments he makes. He obviously has a bias for the academic/intellectual and it is no brainer why he demonstrates this preference as often we are inevitably the products of our own experience. And having spent your early work life as a lecturer at the University you also satisfy this bias

An important organ which you must learn to manage very well is the Bankers’ Committee Meeting. You know how important this meeting could be for collecting relevant views on pending policy initiatives and how for the fear of the Governor most Managing Directors of Banks that constitute the membership of this meeting are known not to feel free to air their views. I should not be saying this to you as you have been at the receiving end yourself. But policy initiatives would not be robust and could suffer embarrassing reversals because members of this body were not encouraged to freely express their reservations or for that matter highlight any gaps which could result in better appreciation of the complexity of the matter in hand. You must find a way to ensure that Bank Managing Directors feel free to make contributions without losing control or allowing any disrespect to the office you occupy.

Be wary of reversing any existing policy. If there are problems with any policies, first isolate the problem and attempt to fix it. It is only after that that you might contemplate radical departures. The Banking environment of late has suffered with many radical developments that it could do with some semblance of stability. Commencing from the recapitalization agenda of the Soludo era to enterprise risk management that characterized Sanusi era, there had been many unsettling developments. One should expect that the Banking sector is by now stable following the many reforms. Remember that your focus as a Governor cannot be circumscribed with the intention to continue to sanitize the banking system. That is a low level job which should engage the attention of at most a Director at the Bank. I would suggest that your preoccupation would be how to make the Central Bank robust and effective in discharging its core mandate of maintenance of monetary and financial stability.

The policy of phased withdrawal of public sector deposits from the banks, though a part of the 13 point reform agenda of the Soludo era could be problematic particularly now that there is talk of removing 100 per cent of such deposits from the banks. What would then happen when public sector agents want to do banking business? If logically one expects them to still go to the banks because they do not have any relationships with the Central Bank, do we not see that precipitating liquidity crises with the banks and possibly creating another round of instability? And therefore we wish to recommend that this policy measure is adopted advisedly.

Ensure that with the board you formulate a policy on donations to guide your social responsibility efforts with annual budgets approved to stem the current tide of criticisms arising from donations which it would appear have been made arbitrarily and whimsically. It is also somewhat inconsistent to be talking about printing 5,000 Naira notes which would make it easier to carry cash against the background of attempts to promote the cashless policy. Please resist the temptation to revisit this program. There are no new currency notes found anywhere now negating the clean note policy of the Bank. But these notes at a premium of up to 20% are sold at social events! The speculation is that there is a syndicate in this regard. You may want to investigate this development with a view to ensuring that clean notes are once again in circulation.

As things stabilize there might also be the need to explore the possibility of divesting the Central Bank of its banking supervision functions to transfer it for instance to Nigerian Deposit Insurance Corporation. Nothing does considerable damage to the image of the Central Bank than when it begins to reverse itself because it has not exercised due diligence or when some data that it produces are of questionable integrity. You must put an end to such embarrassing developments which casts a slur on the image of the Central Bank. My brother I wish you the best and pledge to cooperate with you as you deem necessary as a stakeholder to underwrite the success of your tenure on this job. Good luck.

Dr Boniface Chizea, a management/financial consultant, wrote in from Lagos.

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