The past seven years have seen Nigeria’s economy stagnate, with an annual growth rate of less than one percent. This sluggish growth fails to keep pace with a population increase of over three percent. Additionally, the country grapples with high inflation, currently standing at 24 percent, ranking among the highest in Africa.
The Nigerian Naira has faced relentless depreciation, plummeting by nearly 75 percent in 2023 alone. This depreciation exerts immense pressure on local prices, exacerbated by subsidy and foreign exchange reforms, contributing significantly to inflation.
The adverse economic conditions have taken a toll on both businesses and individuals, resulting in a decreased quality of life for Nigerians. Businesses are grappling with mounting foreign exchange losses, which erode their profit margins. For instance, Airtel Africa reported substantial losses of $151 million due to currency devaluation.
Given the dire state of Nigeria’s economy, questions arise about the backgrounds and performances of its central bank governors, both past and present. According to research from Cambridge, globally, 83 percent of central bank governors hold at least a degree in economics, with only 47 percent holding Ph.Ds in Economics. In Nigeria, half of its governors have backgrounds in economics, either possessing degrees and/or advanced degrees in the subject or having worked as economists.
Reviewing Nigeria’s past governors, only Dr. Clem Isong and Prof. Chukwuma Soludo held Ph.Ds in Economics, and they are widely acclaimed for their commendable management of key economic indicators during their tenures. Dr. Isong’s achievements were commemorated with his portrait appearing on Nigeria’s N1000 currency note in 2005, three decades after his tenure.
Analyzing the career paths of these governors, six of them began their careers at the Central Bank of Nigeria (CBN) or spent several years working at the CBN before becoming governors. In contrast, three governors previously served as Managing Directors of banks, and only Chukwuma Soludo did not fit into either category.
Significantly, over the past 19 years, none of the appointed CBN Governors who served full terms came from within the CBN system; they were all appointed from outside. This marks a departure from historical practice, as only Joseph Sanusi, during Nigeria’s democratic dispensation starting in 1999, rose through the ranks from within the CBN.
During CBN Governor Godwin Emefiele’s tenure, Nigeria witnessed one of the most severe depreciations of the Naira against the US dollar in the official foreign exchange market since the country’s return to democratic rule.
These challenges and criticisms during Emefiele’s tenure underline the intricacies and expectations associated with leading the Central Bank of Nigeria, especially during a period of economic volatility and currency depreciation. The appointment of a non-economist and non-central banker to such a pivotal role triggered scrutiny and raised questions about the direction and effectiveness of monetary policy during his tenure.
Critics of past leadership at the Central Bank of Nigeria (CBN) have highlighted the absence of economists in leadership roles as a factor in some of the controversial decisions made in recent years. This is evidenced in policies that have led to a divergence between CBN rates, Open Market Operations (OMO) rates, and Monetary Policy Committee (MPC) rates, deviating from norms in many countries.
The composition of the Monetary Policy Committee (MPC) plays a crucial role in central bank decision-making. The MPC typically includes the central bank governor as the chairman, the four deputy governors of the bank, two members of the bank’s board of directors, three members appointed by the president, and two members appointed by the governor.
Independent members of the committee are expected to provide a balanced perspective during votes on key policy decisions. However, in a committee where more than half of the members with voting powers are part of the central bank’s management team, often with backgrounds in commercial banking, concerns may arise about the independence and objectivity of monetary policy decisions.
Defining and measuring performance targets for the central bank governor could enhance accountability and transparency in evaluating their performance.
