Nigeria’s Senate confirms new central bank governor amid currency rout

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Nigeria’s Senate has unanimously approved the appointment of a new central bank governor and four deputies amid a worsening rout of the country’s naira currency against the US dollar.

Olayemi Cardoso, a former local executive at Citi and a longtime ally of President Bola Tinubu, takes over for a five-year term following the resignation of erstwhile bank chief Godwin Emefiele, who was suspended in June.

Emem Nnana Usoro, Muhammad Sani Abdullahi Dattijo, Philip Ikeazor and Bala Bello were all confirmed as Cardoso’s deputies.

The new governor faces the considerable challenge of stabilising the naira, which has plunged to record lows over the past month.

Tinubu, who took office in May, had taken steps to converge official and parallel market exchange rates as part of wide-ranging reforms in Africa’s largest economy after rebuking the previous governor’s efforts to artificially prop up the value of the naira.

But the currency has recently fallen dramatically, going for more than N1,000 to $1 on the parallel market this week, widening the gap with official rates, which stand at N785 to the dollar.

Traders in Nigeria’s parallel market say the central bank has not intervened in recent weeks, leaving businesses and individuals seeking supply on the black market. There remains a chronic shortage of foreign exchange in Nigeria.

Finance minister Wale Edun last week said the weakening of the currency was being caused by about $6.8bn owed by the central bank in the foreign exchange market. Cardoso said his immediate priority was to clear this backlog.

Government officials say they are working to bring in liquidity from foreign investors, who continue to shy away from investing in Nigeria. An oil-for-dollar loan scheme for the state oil company to receive $3bn from the African Export-Import Bank (Afrexim) to inject liquidity has yet to materialise.

The central bank also faces pressure to tame inflation, which is at an 18-year high of more than 25 per cent. A meeting to set interest rates had been scheduled for Monday and Tuesday this week but was postponed indefinitely last week amid uncertainty over the bank’s leadership.

Cardoso on Tuesday said: “We will adopt an evidence-based monetary policy and shall not be making decisions based on a whim.”

Senators asked Cardoso if the central bank would under him demonstrate independence from the presidency following Emefiele’s tenure, when the bank was seen as being too cosy with the government of former president Muhammadu Buhari. “Will you be able to tell the president if he’s wrong?” asked Orji Uzor Kalu, a senator.

The bank under Emefiele did not publish its annual accounts for almost the entirety of his time in office and when it did, after his suspension, they confirmed the bank had exceeded its legal limits on lending extensively to the government.

Senators also questioned Cardoso and his deputies on whether they would break with Emefiele’s approach of intruding on industrial policy. Emefiele had prohibited importers of items ranging from rice to toothpicks, and from cement to roofing sheets from accessing dollars.

Cardoso added about industrial policy: “Much has been made of past [Central Bank of Nigeria] forays into development financing such that the lines between monetary policy and fiscal intervention have become blurred. In refocusing CBN to its core mandate, there is need to pull the CBN back from direct development finance interventions into more limited advisory roles that support economic growth.”