Emefiele confirmed as Nigeria Central Bank Governor

The Nigerian Senate on Wednesday confirmed Godwin Emefiele as Governor of its Central Bank following his nomination by President Goodluck Jonathan last month.

He will assume office in June when the term of Governor Lamido Sanusi expires. Emefiele is the Managing Director of Zenith Bank, a position held since last year and has extensive banking experience.

Prior to his appointment, he was a lecturer in Finance, Bank Management and Insurance at the University of Nigeria and University of Port Harcourt. He holds a BSc and MBA in Finance from the University of Nigeria Nsukka.

Emefiele indicated that the Bank’s exchange rate policy was correct and that a devaluation of the naira would be devastating for the import-dependent economy. This is a positive and important statement suggesting that the new Governor will not depart from the CBN’s dollar/naira stability stance implemented over the past few years.

Besides, Emefiele also added that he would take the necessary measures to support the naira which has remained under pressure in recent months.

While there was no explicit discussion about the adequate level of policy and market yields, the incoming Governor’s commitment to exchange rate stability makes it unlikely that there will be official rate cuts anytime soon.

The key question is however whether Emefiele and the MPC will be ready to tighten monetary and liquidity conditions further and let the short end of the yield curve adjust to levels that trigger some renewed interest from offshore investors.

Given the downtrend in FX reserves and challenging fiscal and institutional outlook for the next year, the shift up in yields will become increasingly necessary.

Emefiele urged the National Assembly to undertake a deep study of international norms with respect to central bank independence while admitting that parliament had the mandate to change the existing framework. This comes after a proposed amendment of the CBN Act that will see the CBN Governor answerable to a Chairman of the central bank board appointed by the President and cleared by the Senate, a development that will certainly add to market concerns over the degree of independence of the apex bank in an already difficult market and institutional context.