Lamido Sanusi – Player Turned Referee

Much heat (with little illumination!) has been generated over the federal character impact assessment of the appointment of Mr. Sanusi Lamido Sanusi as the new governor of the Central Bank of Nigeria (CBN). It is time for the needed searchlight on the socio-economic

 significance of the ascendancy of the former CEO of the First Bank as the new regulator.

We are in the season of Soccer. It is part of the climate change therefore to see a transformation of a player as the new Referee of CBN! Many thanks to President Umaru Musa Yar Adua for ensuring generational continuum in the apex bank appointment. While we are unhelpfully inundated with their regional/ethnic profile, both Sanusi Lamido and his predecessor, Professor Soludo actually has a lot in common. For one, they are middle-age new Nigerian activist money market actors. For a nation long suffocated by failed grand fathers in public offices (read: Obasanjo, Rilwan Lukman and Joseph Sanusi,) it is refreshing that Yar’adua challenges us with another accomplished and tested kicking appointee. Importantly, both have shared values in scholarship meaning we should further expect critical owned policies as distinct from general circulars. Importantly both are economists very well unlike accountant Chief Joseph Sanusi, (who true to the calling of accountancy), spent his tenure “balancing” books rather than balancing monetary policies.

Central banking worldwide has been likened to a good (economic) driver, which must keep an eye on the road and maintain steady hands on the wheel for a good (economic) ride.

Countries preoccupied with issues in development use their Central Banks to keep the economy on course through activist macro economics with respect to pricing, (inflation), exchange rates, interest rates, capacity utilization, employment, debt management etc. This is the point the new CBN governor, Sanusi Lamido Sanusi, has commendably brought to the fore on the floor of the senate during his scrutiny session. By engaging 7-point agenda, Sanusi has shown that CBN should be development conscious with respect to macro economics. For one he shows that a development agenda is on the ground and we can only make the agenda better but not deny it. Indeed contrary to the impression given by the banal media headlines, Sanusi has done more good to Yar Adua’s 7 point agenda than score of his ministers who parrot the figure as an appointment route rather than as deliverables for Nigerians. His suggestion that the agenda be downsized is in order given that in reality Yar Adua administration has indeed focused more on energy and infrastructure in recent times. The return of another economist ( the man with biggest picture) as distinct from the limited horizon of an accountant is expected to make some difference.

The point cannot be overemphasized; ‘Central bankers read election results and not balance sheets’. It is early enough that Sanusi Lamido unlike his predecessor Soludo know that elections results (assuming Iwu’s INEC makes the votes count!) are about macroeconomics, namely stable price, stable exchange rates, full employment, improved capacity utilization, debt management and not necessarily about bank consolidation which his predecessor rightly pre occupied self with. Indeed, only in Nigeria can the existing riotous macro economic variables, the most notorious being unemployment rate of 55 per cent, deliver ‘landslide election results!’ South Africa‘s Federal Reserve and its remarkable performance with respect to macroeconomics are central to the recent globally acknowledged victory of ANC government during the recently concluded election results. Thus, the issue in Sanusi’s appointment is not the return of another economist (that is great!) to CBN but the economics of the new economist Governor.

The challenge before Sanusi is not to reinvent the wheel nor look for central banking model that has nothing to do with our miserable reality. The advice this writer gave his predecessor was to look inward. He should find out how late Dr. Clement Isong, Harvard trained economist, together with the then finance minister, late Chief Obafemi Awolowo managed the war economy without external borrowing and without inflation and naira devaluation. With existing level of unemployment, factory closures, low capacity utilization and social deprivations occasioned by poverty and Niger Deltalization of the whole land, the present day economy can indeed be likened to a war economy. We need a CBN that will be part of recovery and this call for activist bank regulator and NOT a passive CBN that bemoans economic decline through periodic reports of despair.

The Bank just marked its 50th anniversary. The question is how it has advanced the development or underdevelopment of the economy. The new governor must be wary of received wisdom. British colonialists (Fisher’s Report in 1952) actually objected to setting up a Central Bank with full functions of managing the economy. Indeed, the World Bank favored “Central Bank with limited functions.” Nigerian nationalists however insisted on full-fledged Central Bank for Nigeria as a tool for economic liberation from exploitative dependency on London money and capital market, which explains the establishment of an Act of Parliament in 1958.

CBN must return to basics and take up the great challenges it was engaging in the 70s and 80s. The CBN must return to its core objectives of maintaining sound financial structure, promotion of monetary stability, safeguarding the value of naira and stable exchange rate and prove a financial adviser to the federal government in the areas of price and exchange rate management and employment creation. It is gratifying to read Sanusi acknowledging the achievements of Soludo. Lesson for the political elite from CBN corporate governance style: the cup is half full not half empty! The challenge lies in filling the cup. One critical area is bank consolidation. As great as that reform is, the issue is not just capital base but capital control. Beyond base build up, it is not over until real economy is grown with single-digit interest rate and certainly well valued Naira.


Issa Aremu – Daily Trust