“Too Much Lending”: Moghalu Blames Emefiele For Rising Inflation

"Too Much Lending": Moghalu Blames Emefiele For Rising Inflation

A former Deputy Governor of the Central Bank of Nigeria (CBN), Kingsley Moghalu, has said suspended CBN Governor, Godwin Emefiele should be blamed for the crisis rocking the foreign exchange market in Nigeria.

Speaking on AriseTV on Thursday, Moghalu questioned Emefiele’s policies and procedures during his nine-year tenure as the head of the country’s monetary body, highlighting the consequences of appointing individuals to sensitive positions without due diligence.

Moghalu said that the CBN under Emefiele deviated from its core mandate.

“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 procedures. 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,” the economist said.

He also lambasted Mr Emefiele’s decision to contest for the presidency while holding the CBN governorship position.

“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.

Speaking further, Mr Moghalu noted that Nigeria’s economy had a peculiar nature, often deviating from traditional economic theories.

“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?” he quipped.

“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,” he added.

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.

“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, partly for other reasons as well.”

Mr Moghalu further attributed the high volume of Ways and Means lending to the government’s poor management of its fiscal affairs.

“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.