Wednesday, March 20, 2013

Nigeria’s Central Bank Governor Won’t Seek Second Term

Reporters: Chris Kay and Maram Mazen, Abuja
Bloomberg News, March 20, 2013

Nigerian central bank Governor Lamido Sanusi, who rescued the banking industry from near-collapse four years ago, said he won’t renew his contract when it expires in 2014.
Sanusi, who has led the bank of Africa’s biggest oil producer since June 2009, said it was never his intention to stay longer than one term. He was speaking in an interview with CNBC Africa in Abuja, the capital.

Appointed in the midst of a debt crisis, Sanusi, 51, fired the chief executives of eight lenders within four months of taking office after an audit found evidence of mismanagement and reckless lending. He’s pushed for stability in the currency and helped bring inflation down below 10 percent, while at the same time antagonizing lawmakers by criticizing their spending and courting controversy for his outspoken views, most recently onChina’s role in Africa.

“That quality of character, that boldness is a quality that will be difficult to find amongst policy makers inNigeria,” Bismarck Rewane chief executive officer of Financial Derivatives Co., a Lagos-based business adviser, said by phone today.

Sanusi led the Monetary Policy Committee in increasing the benchmark interest rate by six percentage points to a record 12 percent from September 2010 to October 2011 to bolster the currency and curb inflation.

Bond Yields

The government should name his replacement soon to help ease investors’ concerns and manage the transition, said Samir Gadio, an emerging-markets strategist at Standard Bank Group Ltd. In 2009, former President Umaru Yar’Adua didn’t name Sanusi as a replacement to Chukwuma Soludo until two days before his term ended.

The naira fell 0.2 percent to 158.95 per dollar by 3:32 p.m. in Lagos, taking its decline this year to 1.8 percent, according to data compiled by Bloomberg. Yields on Nigeria’s $500 million of Eurobonds due January 2022 fell 10 basis points, or 0.1 percentage point, to 4.23 percent.

“He has a strong personality and a lot of people invested in the country just because of the personal relationship and the trust in Sanusi, and the confidence that Sanusi inspires,”Gadio said by phone from Lagos, the commercial capital.

Policy makers kept the interest rate on hold yesterday even as they face rising calls from businesses and the finance ministry to lower borrowing costs to spur investment. Sanusi told reporters in Abuja yesterday a rate cut “could send wrong signals of a premature termination of an appropriately tight monetary policy stance.”

Borrowing Costs

Finance Minister Ngozi Okonjo-Iweala said in July record interest rates that pushed up commercial bank rates to about 20 percent were making it difficult for businesses to borrow.
Sanusi hasn’t shied away from controversy. In December 2010, lawmakers demanded Sanusi apologize for saying a quarter of the government’s spending on overheads went to parliament and that was damaging for the economy. He refused, saying his estimates were correct.

Last year lawmakers attempted to curtail the bank’s powers by proposing an amendment to the Central Bank of Nigeria Act that would strip Sanusi of his position as chairman of the bank’s board. They also pushed to include more external members on the board and have parliament approve the bank’s budget.

China’s Role

More recently, he criticized China’s role in Africa, saying it’s contributing to “deindustrialization and underdevelopment” in the world’s poorest continent. Africa must shake off its “romantic view of China” and see it as a competitor that’s “capable of the same forms of exploitation as the west,” Sanusi wrote in the London-based Financial Times on March 11.

The Chinese government said it was concerned and dissatisfied with the comments, Xinhua reported on March 14, citing Hua Chunying, spokeswoman for the Foreign Ministry.
Sanusi was chief risk officer at United Bank of Africa Plc and First Bank of Nigeria Plc before becoming chief executive officer at FBN in January 2009. A grandson of the 11th Emir of Kano, Sanusi studied economics at the Ahmadu Bello University in the northern state of Zaria and Islamic law at the International University of Africa in the Sudanese capital, Khartoum.

“The next governor will probably have a different outlook or perspective,” Yvonne Mhango, an economist at Renaissance Capital, said in a phone interview from Johannesburg today. “He came into office there was a banking crisis, the currency was depreciating and he had mid-teen inflation. He’s turned that all around.”

To contact the reporters on this story: Chris Kay in Abuja at; Maram Mazen in Abuja at
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