The transition phase between governments is a period of hand-overs and briefings in anticipation for what the incoming government will look like, and make governance seamless. It is also a time for retrospection and appraisals. So, when President Muhammadu Buhari in 2014, then a presidential candidate was campaigning for the Presidency 2015, his major campaign against the then incumbent, President Goodluck Jonathan, was how they mismanaged the nation’s economy. Among his major accusations are the alleged illegal withdrawals by the Jonathan Federal Government, through a Godwin Emefiele-led Central Bank of Nigeria. He promised to prosecute those responsible, and also to positively fix the nation’s macroeconomic indices.
One would expect that the CBN governor, who was appointed by President Jonathan of the opposition People’s Democratic Party in 2014, would be relieved of his duties in 2015 by President Buhari of the ruling All Progressives Congress. Not only did Emefiele complete his first term of 5years in 2019, he was nominated for a second and final term, which would expire next year. What would have made this possible? Your guess is as good as mine. Will Emefiele be allowed to complete his tenure when President Buhari hands over power later this month to his party man and political ally, Bola Tinubu? Again, your guess is as good as mine.
However, say all you like about how Emefiele nurtured and degraded (or destroyed) the Naira or how his policies stimulated or strangled the nation’s economy, it would be unfair not to hand him his flowers for being decisive in preventing the country’s financial institutions from total collapse, failure to which would have, in effect plunged the country in a bigger economic crisis and recession than that which is being faced currently.
By banning Nigeria’s financial institutions from carrying out crypto currency and crypto currency-related transactions, the Emefiele-led CBN has saved banks and other financial institutions from exposing shareholders’ and depositors’ funds to loss, which might have led to the total collapse of the sector. His pragmatic leadership and accurate risk assessment meant that the $4 trillion lost to the sudden collapse of the crypto market in 2022 is not constituted of funds from any of Nigeria’s financial institutions. All individual accounts in any local Nigerian bank that are found to be involved in any crypto-related transaction have been directed to be closed by the CBN, or risk being sanctioned heavily by the regulator.
Proactive risk management entails anticipating a crisis and nipping it in the bud with the necessary mitigant before it crystallizes. It is easy for people to underrate the impact of proactive and visionary risk management techniques if it is employed in time, and a disaster or crisis is averted. This is because people could not have tasted the consequences or impact of the crisis since it was averted, anyway.
To give the CBN heroics more contexts, one of America’s biggest banks, Silicon Valley Bank (SVB) failed in late 2022 more or less as a result of the collapse of the crypto currency market. SVB was the banker for most tech companies in America, which in turn invested heavily in uninsured (crypto currency) deposits. The tech boom of 2020-21 created a façade of success and growth, with share price of SVB growing by about 700%. Because the tech-crypto space had a the distinct feature of zero regulation and stock value volatility, the global economic recession of early 2022 and the rise in inflation rate meant that SVB’s corporate clients withdrew their funds heavily, thus, depleting their cash reserves. Imagine for a second if this had happened in Nigeria. The Central Bank, at that that time, were pressured to allow crypto currency transactions in the country’s fin
Another context is when. FTX, a global crypto currency exchange company, which had over a million users, created what will be regarded as the biggest domino effect in the crash of the crypto currency market, which led to the loss of about $4 trillion in investors’ funds. What is most bizarre about the inevitable collapse was that the company was owned by 29-year-old MIT graduate who managed the global company from the comfort of his Bahamas ‘luxury home office’. The decentralization and lack of regulation of FTX, which was highlighted as the reason of the crypto ban by CBN in Nigeria, ultimately led to the collapse.
Godwin Emefiele as an individual and as a public servant might not have met the minimum requirements the citizens of Nigeria have set out for him, by any performance parameters set. His decisiveness and ‘’stubbornness’ in enforcing the crypto currency ban in Nigeria has definitely saved the country’s financial institutions and ultimately saved the economy from total collapse. For that, he has my flowers.
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