On the Choice of the Next Central Bank Governor

In a few months, Sanusi Lamido Sanusi (SLS) will end his 5 years tenure as the Governor of the CBN and the race for his successor is getting hotter by the day.

The position of the Governor of the Central Bank is an important one and a wrong choice could have negative impact on the economy. In fact we are already feeling the effect of the exit of SLS in the foreign exchange market and the capital market. Participants in both markets are not sure whether the next Governor will continue with the current tight monetary stance and the policy of managing the Naira exchange rate as a key policy tool in managing inflation. Hence the two markets have been trending down in the last few months. Off course there are other reasons for the downward trend one of which is that globally markets have been trending down but the uncertainty surrounding the next Governor is certainly a factor.

A number of ex bank CEOs and current bank CEOs are among the contenders for the job. Among them are accountants and lawyers, we have had an accountant as a Governor but I cannot recall us having a lawyer. The job of the Central Bank Governor is one of the few jobs where the man at the helm is required to have a sound grasp of the technical aspects of the job. In most other jobs, the man at the helm is expected to be a good leader and may not necessarily be an expert in the technical aspect of the job.

Off course most of the contenders who are not economists are probably right now taking a crash course in economics but will a one year course make them experts in monetary policy compared to someone who has been thinking and breathing such concepts for the last 25 years?

Beyond the technicalities are these contenders independent enough to lead our economy forward or will they easily bow to political pressure and do the bidding of the president and the legislative arm of government? And there will be a lot of pressure as we head into the pressure cooker of an election year. Some of the contenders can be said to be in bed with the executive arm of government and it is hard to see them being independent.

And then there is the important question of integrity. SLS has so far been able to escape unscathed because of his integrity. Some of the contenders are tainted and their enemies will surely use such weaknesses to the detriment of our collective good.

I sincerely hope the government will make a good choice otherwise it will be a very bumpy 5 years which will surely make us wish for the good old days of SLS.

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