The Central Bank of Nigeria (CBN) Governor, Sanusi Lamido Sanusi has said the major challenge his successor will face is that of maintaining the independence of the apex bank, warning that any attempt to muscle the bank will be inimical to the economy.
Sanusi who spoke in an interview with Bloomberg TV Africa at the World Economic Forum in Davos, said it is important that the CBN be allowed to make comments openly at all times about the economy without fear or favour.
He said: “It’s extremely important from the fiscal side, it’s extremely important from the governance side, that the governor of the central bank is able to speak independently of political authority and raise an alarm and concerns and give constructive criticism and advice.
“If anyone tampered with it, the markets would punish the economy. It’s a very strong institution that needs a strong leader and I think one of the things we’ve achieved over the last four or five years is to show that we can have an independent central bank in Africa.”
Sanusi, 52, will leave his position in June when his contract ends. During his five-year term, he fired bank executives to clean up an industry that was near collapse, kept interest rates at a record in the face of calls from businesses for lower borrowing costs and last month raised concern about the Nigerian National Petroleum Coroporation (NNPC’s) retaining revenue.
President Goodluck Jonathan hasn’t said anything about who will replace him neither has the president solicited his advice on a potential successor, Sanusi said.
The governor said he has “no fears” of tightening monetary policy further to keep inflation down and to stabilise the currency. The bank can increase its key interest rate from 12 per cent and the cash reserve requirement (CRR) on public sector funds to 100 per cent if needed, he said.
Sanusi said: “I don’t think we are at the end of possible tightening cycles, but I do think that the scope for further tightening is getting narrower and narrower. We do need to rely more on other instruments.”
The CBN has kept its policy rate unchanged at a record high since October 2011, helping to bring inflation down to the lowest level in more than five years last year. That still hasn’t been enough to persuade the Monetary Policy Committee (MPC) to cut rates as oil savings fall, eroding the funds available to defend the currency. The CRR on public funds was increased to 75 per cent from 50 per cent at an MPC meeting earlier this week.
He said inflation will be kept within a band of six per cent to nine per cent this year, controlled mainly by monetary conditions.
“Government spending has not been huge, the real challenge has been on the revenue side and on the foreign-exchange side. I see no reason why from 2015, Nigeria cannot move to within the range of South Africa’s three per cent to six per cent, or four per cent to seven percent” for inflation, he said.
Chief Executive Officer, United Bank for Africa Plc, Phillips Oduoza, said while banks’ earnings will be hit in the short term by the monetary tightening on public funds, it will encourage them to attract more private sector deposits.
“In the short run, it is going to affect every person, but in the long run, I think the system is going to be better off. Financial inclusion is very, very key. We have a significant number of people that are not in the financial system,” Oduoza said in a separate interview in Davos yesterday
Sanusi said he’s unconcerned by “personal relationships,” given the backlash he’s faced since writing a letter to Jonathan alleging the state oil company had withheld $49.8 billion in revenue.
“We meet at work and people should do their job. I do hope that the president will be happy if I do the job very well,” he said.
Finance Minister Ngozi Okonjo-Iweala told reporters on Dec. 18 a reconciliation of the accounts showed unaccounted oil receipts from the NNPC stood at $10.8 billion. The NNPC has said it spent the funds on pipeline repairs, fuel subsidies, crude losses and reserve fuel
