Abuja and Lagos - Nigeria’s nominated central bank governor, Godwin Emefiele, is seen as a steady hand who will maintain tight monetary policy in the face of currency weakness and avoid his predecessor’s controversial forays into politics.
President Goodluck Jonathan swiftly nominated Emefiele as the next governor last week after suspending incumbent Lamido Sanusi, who had become an increasingly vocal critic of the government’s record on corruption.
Sanusi, internationally respected for his commitment to reining in inflation, implementing a successful bailout of Nigerian banks in 2009 and cracking down on money laundering and corruption, had been due to step down in June. His early departure caused a panic sell-off in financial markets, although currency and stocks are now stabilising.
Emefiele, who at 52 is the same age as Sanusi, has more than 20 years’ experience in the sector. He is the managing director of Zenith Bank, Nigeria’s third biggest, where he has built a well-capitalised and stable institution, sources say.
“He’s done a solid job at Zenith and is likely to be a steady hand who will be calm, but markets are jittery right now, so he’s got a challenge on his hands,” a Nigerian banking source said, asking not to be named.
Emefiele’s appointment still has to be confirmed by the Senate. His office at Zenith declined to comment and he was not immediately available to comment on his new post.
His biggest challenge will be protecting the naira, which has come under pressure over the past year on concerns that reduced US monetary stimulus will crimp fund inflows to emerging markets. It slumped to a record low of 169.25 to the dollar in the wake of Sanusi’s suspension and was trading at around 163.5 on Tuesday, outside the bank’s preferred range of 150 to 160 to the dollar.
Intervention by the central bank to keep the naira in the band has run down foreign exchange reserves, and liquid reserves have fallen by 5.2 percent since the start of this year.
That raises the prospect that interest rates, which have been on hold at 12 percent since October 2011, may have to rise to protect the currency.
“We expect he will maintain the current monetary policy tightening stance,” Vetiva Capital said in a research note.
He will not dip into politics, given the manner of Sanusi’s exit, analysts say, and was described by several banking sources as a conservative figure who appeared confident in public but gave little away.
Sanusi, who was suspended soon after raising questions about corruption, has said the biggest challenge his successor would face was keeping the central bank independent.
The president said Sanusi’s suspension was due to irregularities found in an audit of the central bank and the regulator would remain independent.
Bank of America Merrill Lynch downgraded its rating on Nigeria’s external debt to underweight on Tuesday.
Deputy governor Sarah Alade will remain acting governor until Emefiele takes up his post in June, assuming Senate approval. – Reuters