The Federal Government has been called upon by analysts to ensure early announcement of the successor to Sanusi Lamido Sanusi, Central Bank of Nigeria (CBN) governor, as this can guarantee a fair assessment of the accompanying institutional and monetary policy risks.
Besides, they argue that it will ensure a smooth transition process and possibly address market concerns about a possible shift towards a more accommodative monetary policy stance by the incoming governor.
Informed sources say the leading contenders for the office of CBN governor are Aigboje Aig-Imoukhuede, out-going MD/CEO of Access Bank, and Sarah Alade, deputy governor, economic policy, as well as Kingsley Moghalu, deputy governor financial systems stability, both of the CBN.
The advice to announce a successor in good time, is coming just as Babatunde Lemo, Deputy Governor in charge of the Operations Directorate at the Central Bank of Nigeria (CBN) and one of the contenders to the exalted position, alongside the other two deputies, will retire from the apex Bank formally tomorrow, Friday, November 10, 2014, after serving two full terms of five years each.
The fears of the possible market concern stem from the commencement of the Quantitative Easing tapering by the United States, with the attendant possibility of foreign direct investment reversal.
“It is important that the name of the next CBN Governor is announced in advance (perhaps three months before Governor Sanusi’s term expires) so that the market can assess institutional and monetary policy risk more adequately,” Samir Gadio, an emerging markets strategist, at Standard Bank, London, said.
“This would ensure a smooth transition process and possibly address market concerns about a prospective shift towards a more accommodative monetary policy stance that could ultimately affect exchange rate stability.”
Speaking further, Gadio observes that a smooth and orderly succession at the CBN (Governor Sanusi’s term ends in June) will reduce the possibility of a pre-emptive build-up of long USD positions in Q2:14.
“Because Nigeria’s exchange rate is largely policy-determined, a continued commitment to USD/NGN stability should partially mitigate a possible sell-off in Nigerian assets,” he said.
Analysts at Afrinvest said, “The financial system will prefer a CBN governor that possesses similar traits as the present governor, particularly from the perspective of being resolute, proactive and professional. The next CBN governor must possess a perfect understanding of the uniqueness of the Nigerian economy, as well as the intricacies of the banking system. He should have an impeccable character, with impressive track record and sound leadership skills.”
Razia Khan, analyst with standard chartered bank, London said, “Sanusi is seen as the architect of reforms that stabilised Nigeria’s banking sector, the removal of the minimum one-year holding period for offshore investors in FGN bonds, and a more credible anti-inflation policy with a commitment to FX stability.
Given Sanusi’s close identification with factors that contributed to Nigeria’s 2012 GBI-EM index inclusion, investors will closely watch CBN succession plans.”
However, although a statement from the CBN on Wednesday, said that Lemo’s retirement is with effect from January 11, 2014, he will be pulled out of service on Friday, being the last working day before his retirement date.
By: John Omachonu
