As the tenure of the Central Bank of Nigeria (CBN) Governor, Mallam Sanusi Lamido Sanusi, draws closer, some foreign investors and analysts have expressed concern that President Goodluck Jonathan may appoint a governor who is less inclined to challenge overspending by lawmakers and kowtow to pressure from the Ministry of Finance to lower interest rate.
Sanusi is expected to step down in June 2014 when his tenure will expire.
A report by Bloomberg yesterday said the planned exit of the CBN governor was raising concern among investors that his success in curbing inflation and stabilising the currency might unravel in a pre-election year.
In his four years in office, Sanusi, 52, overhauled a banking industry that was near collapse, cut the inflation rate to the lowest level in more than five years and helped to keep the currency within a narrow range.
The Consumer Price Index (CPI), which is used to gauge inflation in Nigeria, fell to a five-year low of 7.8 per cent in October, the latest figures by the National Bureau of Statistics (NBS) had shown.
Those achievements may be threatened as government spending is set to escalate before elections in 2015.
Emerging Markets Strategist at Standard Bank, Mr. Samir Gadio, said in an interview: “There is a risk the authorities might try to appoint a governor they can control. The concern is that the new governor and reshuffled monetary policy committee could actually shift away from a relatively tight monetary stance.
“Sanusi has been ready to tighten monetary policy when needed. We are going into an election in less than 16 months, so what we expect is that for next year, fiscal policy will be significantly expansionary, and if not checked by the central bank, it could result in increased pressure on the exchange rate.”
On his part, a former Chairman of Goldman Sachs Asset Management, Mr. Jim O’ Neill, described Sanusi as “extraordinarily talented,” adding, “I think of him as the Alex Ferguson of central banking,” referring to the former Manchester United manager who is the most successful coach in British history.
“He’s a tough act to follow,” said O’Neill.
While Jonathan has pledged to keep the budget deficit under control, Sanusi himself is wary.
He had said in an interview last month that the central bank was bracing for fiscal “shocks.”
Government expenditure climbed 17 per cent before the 2011 presidential vote.
The key concern among investors is exchange rate stability, including a possible devaluation. The central bank has supported the naira by selling forex at twice-weekly auctions to keep the local unit within a range of three percent around N155 to a dollar.
Jonathan has not given any indication yet of who will be the next governor.
But THISDAY had reported that those under consideration to take over from Sanusi fall into two categories comprising the outsiders, who are likely to steer a new direction for CBN and its monetary policies, and three insiders made up of the deputy governors at the central bank who are likely to continue on the path charted by the incumbent governor.
The outsiders, according to THISDAY investigation are the Managing Director/Chief Executive Officer, Asset Management Corporation of Nigeria (AMCON), 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.
The second group is made up of 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.
Whoever succeeds Sanusi next year will be the 11th governor of the CBN.
However, Bloomberg quoted a research analyst at London-based Exotix Limited (a firm that invests in frontier and emerging markets), Ronak Gadhia, as saying that “In terms of international credibility, there’s not someone who is his equal who could take over.
“It’s everything Sanusi has achieved. He helped sort out the banking crisis, and the currency is as stable as it’s ever been. It’s been really prudent economic management.”