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The Africa Confidential Blog

  • 16th May 2019

Nigeria's chief financial juggler rides again

Blue Lines

On what criteria is Godwin Emefiele, the mild-mannered governor of Nigeria's central bank, about to be given a second term in the job? Although Emefiele is in President Muhammadu Buhari's government, which is meant to be fighting corruption, he has little to say about the fiscal and financial frauds – past and present – that have hobbled the national economy.

Indeed, economists argue that the multi-tier exchange rate which Emefiele administers is opaque and facilitates arbitrage, allocating scarce foreign exchange to the government's political favourites. Yet Emefiele and Buhari are as one on the 'strong naira' policy, defending an 'investors' rate' of N360 to the dollar, under which dollars are about 20% cheaper than on the parallel market. Using strong foreign reserves (running about $45 billion) and high interest rates, cut to 13.5% in March, to defend the currency, there is little prospect of growth exceeding 2.5% this year. The stock market, which has fallen by 8.5% this year, is one of the weakest in any emerging economy.

It seems that Buhari doesn't expect Emefiele to boost growth or bring in investment. Instead his job is chief financial juggler: to run the strong naira policy, with all the ambiguities of multiple exchange rates, preside over one of the biggest national debt markets in Africa, and direct credit to the government's favoured industries and clients. It may be that Emefiele is one of the few bankers who can keep all the balls in the air.

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