- Former Deputy Governor of the Central Bank of Nigeria, Mr Kingsley Moghalu, criticized the performance of suspended CBN Governor, Mr Godwin Emefiele.
- Moghalu questioned Emefiele’s suitability for the role and highlights the consequences of appointing individuals to sensitive positions without due diligence.
- Moghalu expresses concerns about the new forex policy’s impact on inflation and criticizes the CBN’s contradictory actions in combating inflation while contributing to it through lending to the government.
Mr Kingsley Moghalu, a former Deputy Governor of the Central Bank of Nigeria (CBN), has said that the performance of the suspended CBN Governor, Mr Godwin Emefiele, on the core mandate of the bank has not been very impressive.
Moghalu, who stated this during an interview with Arise Television, monitored by Nairametrics, said that he has the highest minimal regard for Emefiele’s performance and has always doubted his suitability for the role as the CBN Governor.
- “You know, discussing the suspension of Godwin Emefiele is something, to be frank, I have not wanted to dwell on because, first, there are currently some judicial issues and judicial procedure. He is in detention and there are allegations against him. So, I don’t want to comment on the exact allegations against him. But looking at his performance as a governor of the Central Bank over the last several years, my view of his performance has been a matter of record.
- “I was saying even when he was the Governor that I have the highest minimal regard, for his performance, indeed even his suitability for the role and we have seen the consequences of not being careful in appointing people to such a sensitive role.
More on Emefiele’s Performance as CBN Governor
He further noted that Emefiele’s alleged failures are the consequences that could arise from appointing individuals to sensitive positions without due diligence.
While acknowledging Emefiele’s efforts, the speaker asserted that the embattled apex bank governor’s focus had been diverted, thus leading to his current predicament. He also noted that Emefiele’s decision to contest for the presidency while holding the CBN governorship position crossed a line and should, in any rational view, render him unfit to continue in that office.
- “Of course, he strived to do his job, but I think it got sidetracked and so, what we are seeing today is not a surprise at all. Especially I want to say that going to contest for the presidency while sitting on the governorship seats of the bank, I think just crossed the line, and in any rational view, that should have made him unfit to continue in that office,” he said.
His take on the new forex policy
On the effect of the new exchange rate on inflation, Moghalu said that the inflationary impact is the biggest immediate threat and the biggest risk, especially when combined with the removal of the petrol subsidy. He noted that inflation in Nigeria is going to continue to shoot up in the medium term.
Speaking further, Moghalu noted that Nigeria’s economy had a peculiar nature, often deviating from traditional economic theories. He questioned the correlation between the central bank’s efforts to raise interest rates and the persistent inflation in the country.
He then explained that the current inflationary trend was not solely attributable to the conventional definition of excessive money supply chasing limited goods. He pointed out the presence of a cost-push factor, wherein material inputs had become more expensive due to foreign exchange challenges and other factors.
Additionally, Moghalu highlighted the role the CBN plays in contributing to inflation through the monetary phenomenon of illicitly financing the federal government’s significant deficits. He mentioned that this lending practice, known as Ways and Means lending, amounted to a substantial sum of N23 trillion. Moghalu criticized the contradictory nature of simultaneously contributing to inflation through such actions while claiming to combat inflation.
Moghalu further attributed the high volume of Ways and Means lending to the government’s poor management of its fiscal affairs.
- But Nigeria’s economy is very funny. It does not always follow the textbooks. Why is it that, although the central bank has been raising interest, interest rates, Inflation has kept going on? There are many reasons for that, one is that what is causing this current round of inflation is not the standard definition of inflation of too much money chasing too few goods only.
- “There is also the cost-push factor, which means that the input into materials has become more expensive partly because of the forex issues and, and partly for other reasons as well. And, I forgot to mention, the central bank itself was contributing to inflation through the monetary phenomenon of illegal financing of the federal government’s massive deficits to the tune of N23 trillion in Ways and Means lending,” he said.
I believed the suspended CBN governor came to this realisation late last year and wanted to correct the effect of the slush funds by the currency redisign/cash swap but the implementation was is the issue as nobody with such amount of monies would allow it to waste,