Emefiele is first governor to have term renewed since 1999
Appointment is subject to the approval of the Nigerian Senate
ABUJA, May 10 – Nigeria’s bonds rallied and the naira currency firmed on Friday after central bank governor Godwin Emefiele was nominated for a second term at the helm of the bank, traders said.
President Muhammadu Buhari has nominated Emefiele for another term, according to a letter read on the floor of the senate on Thursday. The upper house of parliament is expected to confirm the nomination.
Senate President Bukola Saraki read Buhari’s choice of Emefiele to lawmakers on Thursday. His appointment is subject to the Senate’s approval. There was speculation of other possible candidates for the role and Buhari’s decision to give Emefiele a second term is unlikely to usher in major reforms, according to analysts including Mathias Althoff, a money manager at Tundra Fonder AB.
“The likelihood of either the Buhari administration or the central bank under Emefiele doing anything other than what we’ve seen in the past four years is very low,” Althoff said. “The independence of the central bank is, rightfully, questioned. I don’t believe Emefiele is strong enough, nor has he indicated any will to make any major changes to the current foreign-exchange regime.”
The central bank head was managing director of Zenith Bank Plc, Nigeria’s second-biggest lender by market value. Since being appointed, he raised the key interest rate to a record high to contain price growth and bolster the naira.
His decisions to implement currency controls by restricting importers of about 43 items from buying foreign exchange, and his defiance of calls to devalue the naira, may have earned him Buhari’s support to stay on.
The renewal of Emefiele’s term gives a platform for monetary stability at a time that it’s most required, Ogho Okiti, CEO of the Abuja-based Time Economics, told Bloomberg in a text message.
“His reappointment provides the president with a person that has the greatest understanding of his policies and how those policies have shaped Nigeria’s economic growth in recent years and the changes required,” he said.
Emefiele will continue facing the trade-off between inflation that’s been outside the target band for more than three years and the needs of an economy whose growth is lagging its emerging-market peers. The Monetary Policy Committee is scheduled to make its next rates announcement on May 21.
There is little expectation of Emefiele changing the direction of monetary policy. He will continue to pursue the central bank’s development-finance agenda, including lending to different sectors of the economy, Robert Omotunde, an analyst at Afrinvest West Africa Ltd., said by phone from Lagos.
“We don’t expect a freely floating exchange rate regime, he said. “We do not expect any relaxation of the banned 43 items. For investment and attraction of capital into the country, it is not so positive.”