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Analysts set agenda for post-Sanusi’s tenure

By on November 4, 2013

With his chain of achievements, which include inflation moderation, fiscal stability and successful banking sector reform, the outgoing Central Bank of Nigeria Governor Mallam Sanusi Lamido Sanusi, who is expected to bow out in June next year, will be leaving behind a big benchmark for his successor, which analysts say will determine the tenure of the next apex bank chief, reports Festus Akanbi

As a picture of contenders for the office of the Governor of the Central Bank of Nigeria emerges, economic analysts have begun to talk about the kind of regulatory environment likely to be put in place by the next CBN governor in view of the emerging dynamics in the Nigerian economy.

The incumbent governor of the apex bank, Mallam Sanusi Lamido Sanusi, is expected to retire in June next year when he must have completed his five-year tenure. He had indicated that he would not be seeking re-appointment.
Analysts say an understanding of the priorities of the next CBN governor will largely determine the choice of any of the contenders currently being considered for the top job.

The Priorities
There is no doubt that managing the country’s monetary policy by ensuring a sound macroeconomic stability, price and exchange market stability and a single-digit interest rate, all taking place with high growth and jobs, remain the tasks facing the CBN today.
Analysts therefore contended that instead of the present restrictive monetary policy that has seriously hampered the country’s ability to invest, grow and create jobs, in order to bring an inclusive economic growth trajectory, the CBN needs an expansionary monetary policy, one that is pro-investment, growth and pro-job.

Directing Banks’ Investment into Productive Sector
According to an Abuja-based development economist and financial analyst, Basil Enwegbara, “An aggressive monetary policy, instead of our present IMF-style monetary policy, that is only fighting inflation at all costs at the detriment of growth, requires directing banks’ investment into the real sector in a way that real sector firm borrowing accelerates economic growth and job creation, rather than institutionally entrenched monetarist policy that instead of being pro-investment, pro-growth and pro-jobs exposed the banking sector to unnecessary economic financialisation as a result of excessive short-term pursuit of profit maximisation.
“But it is only in a macroeconomic environment with aggressive protectionist policy that such a monetary policy that promotes low interest rate regime will not lead to a possible run on naira, as a result of pressure on the dollar. For these reasons, I think that we need a governor who knows how best to draw the line between prudence that is prudent and prudence that isn’t prudent.”

The Ideal Candidate
However, the CBN governor at the weekend sai having the right balance in appointing his successor was more important than whether his successor was appointed from outside or within the institution.
Bloomberg quoted Sanusi to have said this in an interview in Oslo on Friday that ensuring that whoever succeeds him and the four deputies also to be appointed would be able to manage the various mandates of the central bank was key.
Commenting on his likely successor, Sanusi said: “It could be from within or outside; it doesn’t really matter. What’s important is the institution and to have the right balance.
“If you have someone, say, with a strong economic theoretical background, you need to make sure at the deputy governor level, you’ve got strong banking supervisory, regulatory oversight background. “If it’s a banker that’s more into operations and financial stability then you make sure that you’ve got enough economists to complement it. It’s very collegial.”
The CBN governor said he informed President Goodluck Jonathan in 2011, two years after his appointment that he would leave at the end of his term. He said he plans to notify Jonathan in writing about three months before he leaves and the president will then be free to announce his successor.
Another analyst, Emeka Okoye, said “We need an experienced economist who can simultaneously pursue financial stability, inflation targeting, job creation and overall macroeconomic stability.

Time to Lower MPR?
“Although Sanusi has done reasonably well, it seems he is overstretching his inflation targeting and exchange rate (the current 8.0 September year-on-year inflation rate is not too bad compared to BRICS countries). I think the monetary policy committee should seriously consider reducing Monetary Policy Rate. But with the level of unemployment in Nigeria and the general election still far away, I don’t understand why Sanusi is still bent on his tight monetary policy stance. At the moment, central banks, particularly in the west, are more concerned with reducing unemployment. We can live with a marginal increase in inflation that comes with a lower unemployment. Such trade-offs are acceptable.

Real Sector-friendly Policies
On his own, Enwegbara said, “Because Sanusi has done well in reforming our banks’ governance structure, but failed in promoting growth-based monetary policy, replacing him should be with someone with expansionary monetary policy agenda, someone that favours real sector economy. In other words, someone who rather than pursuing financial stability at all costs, has the gut to devalue our excessively overvalued naira that is making imported goods far cheaper than locally made goods in such a way that displaces local manufacturers and local jobs.
“So, a strong and aggressive governor, shaping the financial and investment decisions of banks in ways that both their long-term and short-term decisions are consistent with and predicable on accelerating economic growth and job creation. He or she should be someone who is ready to let go the current CBN’s regulatory and supervisory function to be domiciled in a new agency with the goal of formulating prudential rules and regulations, off-site and on-site investigations, risk detection, and ability to establish an early-warning system. In other words, the governor should be someone who wants to focus all his or her energy mostly on formulating and implementing monetary policy, safeguarding financial stability, and managing foreign exchange accounts.

Expansionary Monetary Policy
“That is why, if I were the President, replacing Sanusi, I should be looking for someone whose expansionary monetary policy should help me win a landslide second term victory, just the same way Obama’s landslide re-election victory in 2012 wouldn’t have happened without the expansionary monetary policy of the Fed Chairman Ben Bernanke, who, flooding by the illiquid US economy with trillions of dollars, was able to restart the comatose real sector economy by boosting infrastructure spending, stock markets, consumer confidence, and industrial equipment investments.”
On some of the names being touted as possible successor to Sanusi, Enwegbara, who said Nigeria is blessed with brilliant administrators, however, said kudos should be given to the Federal Government for extending the search beyond the CBN.
He said, “I think I will be lying to you if I say I know all the contenders so well to talk authoritatively about both their strengths and weaknesses. One thing is certain, for government to undertake a meaningful transformation; the current CBN’s flip flop monetary policy should be stopped. And this can hardly be done by the current insiders. In the case of commercial bank chief executives, I will suggest that rather than appointing as new CBN governor someone difficult to resist co-option, the President should be looking for someone who has no closeness to the banks.
“True, appointing them straight from the banks with the present independence of the apex bank, allows them to pursue policies that benefit their natural constituencies without appearing to be doing so. Of course, the policy bias is worse when the central bankers explicitly believe that no one queries them should they pursue inflation at the expense of the real economy,” he said.

The Contenders
According to a THISDAY report last week, those in consideration include Mr. Mustafa Chike-Obi; the Group Managing Director/Chief Executive Officer, Access Bank Plc, Mr. Aigboje Aig-Imoukhuede; and Managing Director/Chief Executive Officer, First Bank of Nigeria Limited (FBN), Mr. Bisi Onasanya.
In the second group are insiders who share similar views with Sanusi on monetary policies and are expected to ensure continuity. They are the three Deputy Governors of the CBN: Dr. Kingsley Moghalu, Mr. Tunde Lemo and Dr. Sarah Alade.
In his opinion, a Lagos-based financial expert, Egbujor Ukachukwu said, “Sanusi has done very well. If I have my way I would persuade him to continue. He has managed the banking industry well despite the unfavorable economic environment. For me, continuity is the key here. I will recommend any of these deputy governors that worked with him to continue with his policies. Kingsley Moghalu or Tunde Lemo”.

Chike-Obi
However, Enwegbara believed the AMCON chief stood out based on his effective handling on the bridged bank issue.
He said, “That is why looking at all the current contenders there is no one as qualified as Mr. Chike-Obi.
Unlike other contenders, not carrying an insider neo-liberal excess luggage carry, Mr. Chike-Obi seems to have what it takes to aggressively pursue a pro-investment, pro-growth, and pro-job monetary policy done with the simple goal of helping the president’s reelection, especially given the fact that he is someone who the president should find loyal and reliable.
One of the points to be noted about his unique experience is his ability to find a unique solution to the resolution of the country’s banking crisis through the instrumentality of AMCON.
As a financial expert, it seems he has what it takes to oversee the transition from a banking crisis to a stable financial system and guard against the potential global financial crisis to be caused by the impending fiscal instability in western economies.
•As the Managing Director/Chief Executive Officer of Access Bank Plc, with the mandate to transform the bank into a world-class financial services provider.

Aig-Imoukhuede, who is retiring from Access Bank at the end of the year, was able to take the bank through a rapid and unprecedented growth over the past eight years, which have seen the bank rank amongst the top six banks in the country.
A seasoned banker who understands the dynamics and workings of the Nigerian banking system, the out-going Access Bank boss is on several technical committees at the heart of Nigeria’s economic transformation from banking to equity and debt.
•Onasanya has been the Managing Director/Chief Executive Officer of First Bank of Nigeria Limited (FBN) since April 2009 and he boasts over 23 years post-qualification experience.
He is expected to bring a wealth of experience garnered in the banking and financial services sector and will be following in the footsteps of Joseph Sanusi and Sanusi Lamido Sanusi, who were previously managing directors of FBN before becoming the apex bank governors.
•Moghalu has been the Deputy Governor, Financial System Stability since 2009.
He led the implementation of far-reaching reforms to enhance the quality and stability of banks and other financial institutions, the management of systemic risk to Nigeria’s banking system.
•Lemo, who is currently the Deputy Governor Operations, has been a deputy governor at the CBN since 2004. He is presently driving the industry-wide shared services initiative towards achieving efficient banking services with 30 per cent cost savings for the Nigerian banking industry and greater penetration of banking services. Prior to this, he was Deputy Governor, Financial Systems Surveillance.
He is an experienced and versatile public officer and financial manager.
•Alade has been the Deputy Governor, Economic Policy since 2007 and has served on the teams of major economic policy studies, and has been involved in the preparation of the CBN’s Monetary and Credit Policy Proposals over the years. She was actively involved in the drafting of the Medium-term Economic Programme (MTP) for Nigeria and the IMF staff Monitored Programme/Standby Arrangement.

 

 

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