The 37th Governor

You'd be forgiven for assuming you misread the title of the article. After all, Nigeria has 36 State Governors. The FCT is, perhaps erroneously, governed by a Minister. Yet, there are indeed 37 Governors in Nigeria, and the 37th state may be the most powerful of all. 

Nigeria's economy is a demanding state. And its leader is its Governor. 

The Central Bank has an important role in any nation, giving the person responsible for it relative importance. But while 'other' State Governors are elected, the Central Bank Governor is appointed. And for the first time since the inception of the Fourth Republic in 1999, the positions of President and Governor will be open at the same time. If the debate about 2019 was important before, take into consideration the fact that the next President will appoint an office holder that will shape the state of our economy for another half-decade. 

The Background

Godwin Emefiele is the 11th indigenous Governor in the 60-year history of the Bank. Considering the fact that its fiscal equivalent, the Minister of Finance, has had double the number in an even shorter time period, an argument can be made for the influence successive Governors have accumulated. But this only begins to explain the influence Governors continue to wield. They have become easily identifiable with policies that have defined their terms, and by extension had an impact on the economy and the average Nigerian. Soludo's aggressive effort to carry out bank consolidation whittled the number of banks to 25. Lamido Sanusi's fight against weak banks led to him instituting 10-year limits on the tenures of CEOs. And Emefiele had to respond to a recession and the subsequent battle to save the Naira. The position comes with the power to enact sweeping change and reform. And as with most disruptive actions, they have come with a commensurate amount of detractors and critics. But that only comes because the position is more influential than Nigerians think.

With Great Power...

A strong economy, a strong currency and strong finances. Three promises that are often made by candidates for office, and issues that are effectively handled by the only Governor people don't vote for. 

The Bank's function includes acting as banker and providing economic advice to the Government, a duty it discharged in releasing money for the Agric Credit Scheme. It includes providing a sound financial system, a role that includes waging a battle against corruption, both within and outside government. It also involves building the external reserves to protect the currency, a role that only it can fulfil. But ask the man on the street, and plaudits for building the external reserves will alternate between Obasanjo and Yar'Adua/Jonathan. And while Buhari will rightfully be praised for the Treasury Single Account and his fight against corruption, the CBN carried out the exercise. 

Checks and Balances

A hackneyed point is that the Governor is not elected. But after nomination and Senate confirmation, the constitutional protection afforded to the Governor is deliberately designed to protect an important role. Even in the heat of the Sanusi/Jonathan showdown, in the wake of the NNPC accusations, section 11(f) of the constitution supported Sanusi since he could not be removed without a 2/3 vote in the Senate. But we can't disregard the power of the presidency. Jonathan still succeeded in suspending Sanusi, and the Federal Government succeeded in discrediting the independence of the CBN with accusations of Dasuki treating the bank as a personal ATM.

There are other institutional bottlenecks. It's a 5-year term, with a possible renewal not exceeding five years. While this could provide stable leadership for potentially 9 years, recent Governors have only served a single term, leading to a lack of stability in management. Former Governors Soludo and J.O Sanusi were open to staying but were replaced. This is in contrast to most countries, like the UK with a term of 8 years that is renewable once, or the US with a term of 4 years but with holders often renominated. This longevity has combined general expertise with institutional acumen, a pairing that has often helped deal with recessions and financial crises. An example of this is two-term US Federal Reserve Chair Ben Bernanke, who started his second term at the beginning of the 2008 Financial crisis and is credited with managing the recession. A question that lingers is whether Presidents are concerned with the power that increasingly independent Governors exhibit when they aren't easily controlled. After all, post-Obasanjo presidents have had to work with Governors they did not appoint. Another increasing debate is on the fact that more former Commercial Bank CEOs (4 of the last 5 Governors) have been appointed over career economists. This is all the more glaring when reputable Deputy Governors, with institutional experience, have often been sidelined.  

History will judge Emefiele's term. But if trends persist, he will be leaving his post on June 3, 2019. Perhaps one-term Governorships of a Central Bank is catching on, with Trump similarly refusing to renominate the incumbent Federal Reserve Chair, Janet Yellen. Buhari has notably not replaced any core member of his teams. However, regardless of his preference, he will face a seemingly independent Senate that has now avoided hearings on 2 Deputy Governor nominees because of the Magu nomination. This is already affecting fragile investor confidence. Buhari will do well to solve the impasse if he is nominating the next Governor. As we have seen, the Bank and Nigerians, cannot afford to have a vacancy in that post.

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