Godwin Emefiele, President Goodluck Jonathan’s choice as Nigeria’s next central bank chief, is an experienced financier who’ll inherit an institution under extra scrutiny after his predecessor was suspended amid a corruption dispute.
The nomination of Emefiele, chief executive officer of Zenith Bank Plc, was sent to the senate for approval yesterday, hours after Jonathan’s office said Lamido Sanusi was suspended because of “financial recklessness and misconduct.” Emefiele won’t take over until June, when Sanusi’s term was due to end.
Emefiele, 52, will have to steer Africa’s largest oil producer through next year’s presidential election amid pressure to boost government spending, manage a currency that has plunged this year and keep inflation under control. That’s in addition to the questions about central bank independence raised by the manner of Sanusi’s departure, which came after he alleged that billions of dollars of government oil revenue had gone missing.
“He is likely to maintain a firm policy environment and be inclined to tighten policy given the environment of the weak naira,” Yvonne Mhango, sub-Saharan Africa economist at Renaissance Capital in Johannesburg, said in a phone interview. “The biggest challenge will be stabilizing the currency.”
The naira slumped as much as 3.2 percent to a record low of 168.90 against the dollar yesterday after Sanusi’s suspension. The currency fell 0.1 percent to 165.28 against the dollar as of 2:32 p.m. in Lagos, the commercial capital.
Emefiele didn’t respond to two emails and calls to his mobile phone to seek comment.
A banker with 26 years’ experience, Emefiele became the managing director of Zenith Bank, Nigeria’s second-largest lender by assets, in August 2010 after serving as deputy managing director from 2001.
He has an MBA degree in Finance from the University of Nigeria in Nsukka and lectured at the University of Port Harcourt, in the oil rich Niger delta. That’s the same institution where Jonathan taught before he entered politics.
Emefiele also took courses at Stanford University, Harvard University and Wharton Graduate School of Business, according to the website of Zenith Bank.
Jonathan has come under fire from investors for suspending Sanusi and undermining the independence of the central bank. As Jonathan’s pick, Emefiele may face questions about his independence as a central banker, Jibrin Ibrahim, director of the Abuja-based Centre for Democracy and Development, said in a phone interview.
“Whoever is appointed now feels he has to obey the presidency because he knows he can be removed, it’s a very dangerous precedent,” Ibrahim said. “The key issue is being able to resist directives from the president.”
Emefiele’s nomination was a surprise to many analysts. Vetiva Capital Management Ltd. said in an Oct. 28 report that potential candidates to the position include Sanusi’s four deputies -- Sarah Alade, Suleiman Barau, Tunde Lemo and Kingsley Moghalu -- and Aigboje Aig-Imoukhuede, chief executive officer of Access Bank (ACCESS) Plc.
Emefiele’s experience in banking gives him credibility and makes him a “safe pair of hands,” Bismarck Rewane, chief executive officer at risk advisory, said by phone from Lagos today. “He has been in the system for long, so bank regulation should be a familiar terrain to him. Managing the central bank should also not be a problem to him.”
He steps into a position that’s been strengthened during Sanusi’s term as he worked to build credibility in monetary policy by stabilizing the currency and inflation. Sanusi led the Monetary Policy Committee in keeping the benchmark interest rate at a record high of 12 percent since November 2011, helping to bring inflation down to a five-year low of 7.8 percent in October.
Emefiele may stick to Sanusi’s tight policy. In a Nov. 7 interview, he said the central bank is unlikely to lower borrowing costs this year ahead of elections.
“There’s going to be a lot of spending and the central bank has a lot of work to do in controlling the spending so that it doesn’t spiral into interest rate effects too,” Emefiele said. The bank may cut rates once demand for foreign currency is under control, reserves rise and oil prices remain high, he said.
The naira has slid 3.8 percent against the dollar this year. The central bank sells foreign currency from reserves at twice-weekly auctions to help keep the currency within a band of 3 percent around 155 per dollar.
Sanusi’s concern that reserves are being eroded prompted him to question the state-owned oil company about alleged missing revenue. Tension between him and Jonathan intensified after he called on the president in December to investigate the oil accounts.
Sanusi said in an interview last month that his successor’s main challenge will be to maintain the independence of the central bank and any undermining of that may hurt the economy.
“There is no threat to the economy or to monetary policy by changes announced yesterday,” Trade Minister Olusegun Aganga said in a phone interview from Abuja. “Godwin Emefiele is an experienced banker. He is qualified for the job, so I think he will sail through the Senate’s screening. The independence of the central bank can’t be compromised.”
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