Appointment Of New Cbn Governor: Matters Arising

The tardiness of the Federal Government in announcing the appointment of a Governor of the Central Bank at the expiration of the tenure of the last incumbent is reprehensible and indefensible. The date of expiry of the term of office of the CBN governor was hardly a well-kept state secret. Not to have been pro-active over such a delicate and defining issue sends a totally unacceptable signal to investors, key players and watchers at home and abroad.

Elsewhere, such tardiness is rare or unheard of. It contrasts sharply, for example, with the alacrity with which the administration of the United States President, Barack Obama, responded to a recent opening on that country’s Supreme Court. In the first instance, the outgoing justice did not have a fixed term of office or a defined retirement age. The retirement announcement clearly took the Obama administration by surprise. Nevertheless, like the boy scouts they were prepared. An acceptable, indeed widely admired replacement was announced under a fortnight and sent to the Senate for confirmation. Such preparedness is what is expected of a result-oriented government.

By being wooden footed on this crucial issue, President Yar’Adua unleashed all manner of manoeuvrings, most of them unsavoury and laden with hidden agendas. A by-product of this is the utterly unacceptable trade-off over the CBN’s controversial investment in the African Finance Corporation (AFC). In what is obviously a cold and calculated manoeuvre by the Federal Government to ease the speedy confirmation of its nominee, the admirably qualified Lamido Sanusi, it repudiated the findings of a probe panel on the AFC issue and Nigeria’s investment of $468 million (about N56.16 billion) in it. The position of the investigating committee had been that the “CBN board” had “no mandate to approve investment in an organization that is not approved by the government. Therefore the purported investment was a nullity….” In rejecting the position of the panel, the President has now asked the CBN to proceed with the investment. This obvious trade-off has been made in order to lubricate the new nominee’s confirmation by a Senate that is anxious to go on recess.

The deal represents a cavalier attitude to the governance of a nation, and portrays the government’s purported commitment to due process and to the war against corruption as being, at best, half-hearted. The credentials of Lamido Sanusi, from information in the public domain, cannot be controverted. He is professionally suited to the task at hand. In addition, he enjoys a reputation of unimpeachable integrity. Nevertheless, the Senate confirmation ought not to have been hurried up. The post of head of the country’s central bank is far too important for that. To short-circuit the confirmation process because of the tardiness in submitting his nomination was tantamount to rewarding the Presidency for its lethargy and lack of planning and foresight. It also had the effect of diminishing the post and demeaning its holder.

Those who have brought up the issue of ‘federal character’ should not, and cannot, be waved aside. There is certainly a clear case to be made for exempting certain key posts, in which technical capacity is uppermost, from the federal character ordinance. Nevertheless, it is a constitutional issue and in a multi-ethnic federation, everyone must be mindful of the sensitivity of this issue. In the past two years, the Yar’Adua administration has not shown, in its operations, due sensitivity to this constitutional imperative. Indeed, its record in this regard can be regarded as dismal. For this reason, a lot of self-serving opportunists have used this debilitation as a road block to the confirmation of an otherwise promising choice. This sort of opportunism rears its head when those in authority are derelict in their duty.

The performance of the head of the Central Bank is absolutely vital to the welfare of the people, the economic well-being of the state and the prospects of the next generation. Within these parameters, macro economic stability is crucial, indeed a proven ingredient for the pursuit and attainment of social justice. The weakest social sectors and segments of the population will continue to be debilitated if there is no price stability, interest rates are high and the exchange rate is subject to wild plunges and fluctuations. This is why many sensible countries place the operational independence of their central banks at a par with the independence of the judiciary.

It is obvious that the sound management of the money supply is a vital key to the quality of life of the citizens. In this regard, inflation targeting and fighting are crucial. The rate of inflation and interest rates are clearly interlinked. From the point of view of overall well-being, monstrously high interest rate levels, which have been sustained in the country for over a decade, cannot stimulate the economy in such a way as to create an environment for sustainable, employment-generating growth in the real sector. Unstable monetary policies and wild fluctuations in exchange and interest rates have gone hand in glove with the de-industrialisation of the country. The result is the worsening pauperization of the citizens. This trend has to be reversed; therefore the new man has his job well cut out.

The nation must ponder why periods of prolonged windfalls in foreign exchange earnings, as witness under the immediate past Obasanjo regime, have resulted in the paradox of the country falling into the bracket of the world’s poorest nations. We finger the poor management of the money supply as a principal culprit, added to systemic corruption and visionless leadership.

For this reason the government must have the intellectual humility to accept that there is a close correlation between the poverty of the Nigerian people and the decline in the value of the nation’s currency over the last few decades. New options and new thinking must be considered. We recommend that these should include the option of adopting dollar certificates for paying dollar-denominated revenue in all statutory allocations to the three tiers of government. Our stand, in other words, is that henceforth monetary policy must be skewed towards genuinely revamping the productive capacity of the economy through providing the context for low interest rates that are conducive to sustained economic growth, reduction of inflation, high employment creation and general economic well being. A change in leadership at the top of the CBN should and must herald these positive indices.