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Wednesday, 4 December 2013

Sanusi Lamido Sanusi to Step Down

Nigerian central bank governor Lamido Sanusi is preparing to leave his post in June, raising concerns among investors that his success in curbing inflation and stabilising the currency may unravel in a pre-election year.

In his four years in office, Sanusi overhauled a banking industry that was near collapse, cut the inflation rate to its lowest level in more than five years and helped to keep the currency within a narrow range. Those achievements may be threatened as government spending is set to escalate before elections in 2015. 

Sanusi was “extraordinarily talented”, Jim O’Neill, the former charman of Goldman Sachs Asset Management, said in Lagos. “I part think of him as the Alex Ferguson of central banking,” referring to the former Manchester United manager who is the most successful coach in British history.
“He’s a tough act to follow,” said O’Neill. 

“Sanusi has been ready to tighten monetary policy when needed,” Samir Gadio, a strategist at Standard Bank Groupin London, said. 

“We are going into an election in less than 16 months, so what we expect is that for the next year, fiscal policy will be significantly expansionary, and if not checked by the central bank, it could result in increased pressure on the exchange rate.” 

The government is already drawing down savings to meet its spending needs as oil production misses targets. 

While President Goodluck Jonathan has pledged to keep the budget deficit under control, Sanusi himself is wary, saying in an interview last month that the central bank was bracing for fiscal “shocks”. 

Government expenditure climbed 17 percent before the 2011 presidential vote. 

The key concern among investors is exchange rate stability, including a possible devaluation.
The central bank has supported the naira by selling foreign currency at twice-weekly auctions to keep the local unit within a range of 3 percent of 155 to the dollar. 

Jonathan hasn’t given any indication yet of who will be the next governor. Lagos-based Vetiva Capital Management said in report in October that potential candidates included Sanusi’s four deputies – Sarah Alade, Suleiman Barau, Tunde Lemo and Kingsley Moghalu – as well as Aigboje Aig-Imoukhuede, the chief executive of Access Bank, Nigeria’s fifth-biggest lender. 

“In terms of international credibility, there’s not someone who is his equal who could take over,” said Ronak Gadhia, a research analyst at London-based Exotix. “There is a risk the authorities might try to appoint a governor they can control,” Gadio said. 

Appointed in 2009 during a debt crisis, Sanusi oversaw a 620 billion naira (R39.4bn) bank bailout and fired the chief executives of eight of the country’s 24 banks after an audit found evidence of mismanagement and reckless lending. 

He is an economist by training and a former chief executive of First Bank of Nigeria.
When he left, he said in an interview in November, he planned to take a short break, perhaps study Mandarin, before ideally working at a think tank focusing on economic policymaking in Africa. – Bloomberg
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