Nigeria: Is it Time for a New Central Bank Governor?

Published on 9th March 2009

Charles Seludo     Photo:Courtesy
After almost 5 years, Nigeria's current Central Bank Governor, Charles Soludo, is set to step down in May. However, given the current economic climate, is now a good time to hand over the reigns of Nigeria's economy to someone else?  And if so, who should that person be? 

Soludo as governor 

Soludo was fortunate to manage the Central Bank (CBN) during a time of wealth, as the price of oil was high and oil profits were put into financial arrangements like the Excess Crude Fund (created by a military dictator) and the nation's Sovereign Wealth Fund. Additionally, he successfully heralded the improvement and empowerment of Nigeria's financial sector, resulting in 16 Nigerian banks ranking in the world's top 1000.  Furthermore, he has repeatedly proclaimed the aspiration of transforming the nation's commercial capital, Lagos, into a global financial city. However, not every decision he made was considered a success. His announcement of the re-denomination of the Naira in 2007 was quickly shot down by Yar'Adua, who explained that the plan had not been approved by his office. 

Despite any problems Soludo had, he arguably was good for Nigeria's financial sector which grew under his care. That is why his potential replacement, assuming that he is indeed replaced, must be closely scrutinized. The new Governor of the CBN must be someone with proven experience in dealing with national economic matters, particularly in tough times. Furthermore, that person must be one who gives the market confidence and will not discourage local and foreign investors from investing their money in the country. Considering the current instability in Nigeria’s economy, and the fact that the Naira has fallen by at least 20% against the US Dollar in recent months, Nigerians will need someone capable of creating and implementing innovative schemes to prevent the complete breakdown of Nigeria's financial markets and system. 

Is Yar'Adua's Son-In-Law Up For The Job? 

Nigeria has been declared one of, if not the, safest economy in the world by the likes of Merril Lynch and the Africa Rainbow Consulting, which announced Nigeria as the best African country for investment. Despite the  tightening of the foreign exchange rate policy, and the drop in foreign  reserves, investors, like George Soros, still keep their eyes on the  country as a potential investment location. As such, the CBN governor  position is a plum position to have. 

Given this reality, it is curious that the Leadership paper reported that  the President's newest son-in-law, Isa Yuguda, the governor of Bauchi  State, could likely head the CBN. It is unclear what his qualifications  would be for such a job, except for his governorship over a state currently  experiencing religious violence which he, Yuguda, summed up as being the  work of his "political detractors". 

The possibility of such an appointment is dangerous for Nigeria and its  people. Nigeria is a struggling democracy trying to shed its reputation for extreme corruption. Having the Presiden't son-in-law at the CBN will leave  little confidence that the coffers will not be emptied the way they have  routinely been emptied in the past. That attitude will not necessarily be  because Yuguda or Yar'Adua are known for corruption and stealing from the  people, but rather, it will be due to the nation's history of having  corrupt leaders steal from the very people they were to serve. After all,  Nigeria is still recovering millions of the estimated $2 - 5 billion stolen  and hidden all over the world by its last military dictator, Sani Abacha. 

Nigeria is a country that has made it through tough times before and will  undoubtedly make it through tough times in the future. Nevertheless, every  Nigerian has a vested interest in ensuring that control of the Central Bank  is passed on to credible hands. Nigeria cannot afford to have anyone but  the best person, man or woman, in that position and there must be no room  for corruption. Whoever takes on that job, when Soludo leaves, will need to  be ready to keep the nation's financial sector afloat in these difficult economic times, while creating confidence in the economy for foreigner  investors and most importantly, for the Nigerian people.

By Solomon Sydelle

 Nigerian Curiosity

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