By ETIM ETIM

The appointment of Mr. Olawale Edun, a seasoned investment banker and former commissioner of finance in Lagos State, as the Special Adviser to the President on Monetary Policy, has set off a torrent of speculations on what exactly would be his job description given that monetary policy is statutorily the main function of central banks all over the world. In a rare case of unanimity, many economists I have spoken to agree that the appointment is an aberration that could erode the hard-worn independence of the CBN, or create some conflict between the Presidency and the monetary authority. Broadly speaking, monetary policy is a set of tools used by a nation’s central bank to control the overall money supply, interest rates and bank reserve requirements in order to tame inflation and promote economic growth. In other words, the CBN’s core function is primarily to achieve price stability in the economy – a duty specifically assigned to one of the four deputy governors of CBN. It’s core job of all central banks in the world.

It is for this reason that many economists and bankers are bewildered by President Tinubu’s new hire. They believe that Edun may encroach on the independence of the CBN and whittle down its prestige in international finance. “I do not understand the significance of the appointment, and I’m worried that the new administration might be straying into unfamiliar territory”, says Horgan Akpan Ekpo, a professor of economics, who had once served as a member of the Board of Directors of the CBN and a member of its MPC (Monetary Policy Committee) during the tenure of Prof. Charles Soludo as CBN Governor. Speaking to this writer exclusively, Ekpo notes that although Mr. Godwin Emefiele might have made some mistakes in the manner he ran the Bank, it is not enough reason for the government to seek to interfere in its core functions. “The CBN Act confers enormous independence on the Bank for good reasons. It is a big progress from the days when the Bank was a parastatal of the Ministry of Finance; so, it would be a serious retrogression for us to do anything that would take us backwards”, Ekpo, a former vice chancellor of University of Uyo, said. Ekpo had also been the chief executive of West African Institute for Financial and Economic Management (WAIFEM), a training institution co-owned by the Central banks of the Anglophone West African countries.

Central banks are also the chief regulator of the banking industry. They ensure that the industry is stable, no matter the extent of the economic cyclones a nation faces. Many bankers are therefore understandably uneasy about Edun’s new role. “I suspect that Wale Edun’s job would be essentially to watch over the CBN Governor on behalf of the President, and to ensure that the Bank takes orders from the Villa,” says Patrick Osadebe, a financial consultant who has had a long career spanning banking and insurance. Osadebe believes that the President will like to have a total control of what happens in the economy, and so he wants a trusted ally to watch over the new CBN governor that will replace Emefiele. He says: “Emefiele was very close to President Buhari. He could walk into the Villa at any time and see President Buhari at a short notice. But in this era, Tinubu may not need a direct interaction with the governor, and so, it is Edun that would be an intermediary between the Villa and the CBN”. But since there is National Economic Council (NEC) and the President may appoint an Economic Adviser and or Economic Management Team, Osadebe believes that Edun’s role does not make much sense as he may seek to interfere in the core functions of the CBN.

Another economist and banker, Marcel Okeke says the appointment is an aberration as Edun may be working in conflict with the law establishing the CBN. “Mr. Edun is an accomplished banker and a thoroughbred professional, but he cannot take over the duty of the CBN. By the CBN Act 2007, monetary policy matters are the sole responsibility of the CBN”, Okeke, who was also one of the influential finance journalists in the 1980s, said. He notes that even the judgement of the Supreme Court on the issuance of the new Naira notes by the CBN last year was an anomaly since “monetary matters should not be decided by the Supreme Court but by the CBN”.

Former Deputy Governor of the CBN, Prof Kingsley Moghalu, refused to make a comment when I contacted him. I was surprised at his reticence because Moghalu is naturally vocal on matters of public policy and public interest. However, in a statement he issued last September on the need to maintain the independence of the CBN, Moghalu had argued against a proposed bill presented at the National Assembly that sought to remove the Bank’s Governor as its Chairman and deny the Board powers to approve its budget and fix salaries of staffs. “Such amendment to the CBN Act of 2007 would finally destroy the institution by disrobing it completely of its institutional independence as enshrined in the Act. It would make the Bank, a statutory corporation under the law, to become a ministry or a mere agency or department of government; and it would render the bank an open playground for politicians who are the custodians of our dysfunctional governance”, he wrote.

What then is my personal view on Edun’s appointment? I had initially thought that Edun would be the finance minister under President Tinubu. He fits the bill by all standards. But when this appointment was announced last week, I was equally surprised. First of all, it is not the job of the President to fix interest rates or manage money supply (M1 and M2). That is the job of the CBN; and the CBN Governor is also the chief adviser to the government on such matters. Well, maybe the President needs another opinion, in addition to that of the CBN, I told myself, or the appointment could just be a subtle hint that Edun is being prepped to take over as the new CBN Governor. Remember, Prof Soludo was first made chief economic adviser to the President before he was appointed CBN Governor some 20 years ago.

•Etim Etim, veteran journalist and public affairs analyst, originally wrote this piece under the heading, “What exactly will Wale Edun be doing?”

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