The next CBN Governor

It is instructive that in the last ten years, since the tenure of Chukwuma Soludo (2004-2009) and Sanusi Lamido(2009 –date) as CBN Governors, the impact of the CBN on the economy and polity has been largely significant, definitive and visible.

One thing is certain. This remarkable turn in the history of the CBN did not emerge by accident. It draws essentially from the understanding of the mentioned Governors of the proper roles of a Central Bank in an economy, their interpretation of the powers of such a Bank and their profound grasp of the associated development functions of the bank, and more importantly the strength of character of these individuals to steer the CBN in the right path of independence.

Beyond being bullish in the fight of sanitising the banking industry in continuation of the path of consolidation pursued by Chukwuma Soludo, Sanusi Lamido Sanusi has rightly positioned the CBN not only as a strong and responsive regulator of the banking industry but an effective manager of Nigeria’s macro-economy. It is in performing the latter role that the CBN under the current Governor has been significantly impactful on the economy, a performance that has been perceived differently by diverse stakeholders. While some have lauded Sanusi Lamido Sanusi as an “action Governor” who understands the real powers he wields as CBN Governor, others criticise him for been controversial, visible, mouthy or taking more than he can chew.

However one views Sanusi’s tenure, it cannot be denied that the CBN under his direction has moved on remarkably to take up its influential roles as provided by Law, and in consonance with emerging realities in the global economy.

The Central Bank in developing economies often takes on the role of a development institution. The Central Bank in Nigeria has intervened in the Power, Aviation, and Agriculture sectors of the economy by setting up intervention funds with the aim of extending loans at low interest rates.

Experts have justified the existence of a powerful and independent Central Bank especially in a resource rich and ethnically diverse country to serve as an efficient institution that can check economic profligacy. Paul Collier, a foremost economist specifically notes that:

“Independent central banks are themselves one of the critical checks and balances that a resource-rich society needs…Central banks cannot afford to retreat into technocratic isolation”.

It is for the sake of sustaining the prime monetary and economic role of the CBN, not allowing the CBN to slide into position of a government agency, with attendant negative fallout for the proper management of the economy, that we urge the Presidency and the National Assembly to seek and appoint a competent person driven by logic and with strong character to take over from Sanusi Lamido Sanusi come June this year.

The next CBN Governor will emerge in a period of dynamism, opportunities and even risk management in the economic history of Nigeria. Nigeria will soon emerge as Africa’s largest economy, as the rebased GDP figures will show its GDP jumping by 60 per cent to $430 billion. Nigeria straddles the Emerging and Frontier markets with her bonds included in the JP Morgan emerging market bond index (GBI-EM) and having equities in various Frontier market indexes including the MSCI. Opportunities abound in these milestones that should be tapped through an effective management of the macro-economy.

We advise that the search for an appropriate CBN Governor should not be marred by short term interests bordering on idiosyncrasy, political opportunism or ego driving pursuit. CBN Governorship is not for stooges or people who will dance to the gallery. Nigeria’s Central Bank has come a long way to achieve its present influential status. Any move that will make the CBN retrogress must be resisted.

BusinessDay