The appointment of a qualified and competent individual as the Governor of a Central Bank is very crucial for the stability and growth of a country’s economy. This has become imperative in the particular case of Nigeria, where the Central Bank of Nigeria (CBN) had been run aground in the last decade, with the consequence of the adverse economic situation that the country now finds itself.
Further, in the case of the Central Bank of Nigeria, the recent appointment of Dr Yemi Cardoso, who from his reputation and experience, is seen in the banking and finance sector as a perfect fit for the job at this critical time in the history of Nigeria, has however been met with a few criticisms from some analysts, who argue that Dr Cardoso is not a central banker. However, it is important to recognize that being a commercial banker with executive management experience in a reputable bank, such as Citibank, and having served as Chairman of the bank, are strong enough professional prerequisites for the role of Governor. Reading a few comments of the critics of his appointment, it should assuage such concerns, if I try and elucidate the professional qualifications necessary for a commercial banker, such as Dr Cardoso with his SEK/ effacing demeanor to be a qualified Governor of the Central Bank of Nigeria, and argue that his appointment is justified based on his experience and temperament.
The role of a Governor of a Central Bank requires a deep understanding of the banking system, monetary policy, and economic stability. While there have been instances where individuals from commercial banks or even outside the banking system have been appointed as Governors, it is essential to assess their professional qualifications and experience. Cardoso's background as an executive in a first-class bank and his previous role as Chairman demonstrate his expertise in the banking sector, making him a suitable candidate for the position of Governor.
First, from his Cardoso’s over 30 years experience as a banker, he possesses an In-depth knowledge of the banking system
So for him as a commercial banker he possess a comprehensive understanding of the banking system. Which includes his knowledge and experience of banking operations, risk management, financial regulations, and the ability to analyze market trends. Cardoso's experience as an executive in Citibank and his role in Executive Management and Chairman of Citibank, indicate his familiarity with these aspects of the banking system.
Secondly, going by Cardoso’s academic credentials and the rigorous in house trainings and programs that he undertook in the banking sector, he must have acquired clear understanding of treasury management, credit and monetary policy, which are some of the prerequisites of being the CBN governor.
Monetary policy plays a crucial role in maintaining economic stability and controlling inflation. A qualified Governor should have a strong understanding of monetary policy tools and their implications. Commercial bankers often deal with monetary policy decisions and their impact on the banking sector. Cardoso's experience in executive management positions would have exposed him to these policy decisions, making him well-versed in this area.
Thirdly, Dr Cardoso’s leadership qualities and experience as the Lagos State Ministry of Budget and Planning, during the Bola Tinubu’s administration in Lagos State, are clear indications of his management skills.
As the head of the Central Bank, he undoubtedly possesses strong leadership and management skills. Commercial bankers, especially those who have held executive positions, are accustomed to managing teams, making strategic decisions, and handling complex financial matters. Cardoso's experience as Chairman of Citibank also demonstrates his ability to lead and manage effectively. His combined experience in private sector banking and public sector budget and planning, makes him an excellent choice for the governor of the CBN.
Those criticizing the appointment of a commercial banker as the Governor of CBN, may be reminded of precedents of outstanding commercial bankers who have held such positions in the past:
Paul Oguma and Joseph Sanusi:
In Nigeria, previous Governors of the Central Bank, such as Paul Oguma, Joseph Sanusi, and Emir Sanusi Lamido Sanusi were appointed from commercial banks. Their experience in the banking sector equipped them with the necessary skills to effectively manage the Central Bank. This precedent supports the appointment of commercial bankers as qualified Governors.
Other examples of Central/Reserve Banks Governors being appointed from outside the system in other countries abound.
Italy: In 2019, Ignazio Visco was reappointed as the Governor of the Bank of Italy. Visco, an economist, had previously served as the Director-General of the Treasury in Italy's Ministry of Economy and Finance. His appointment as the Governor of the Bank of Italy was seen as a departure from the tradition of promoting from within the central bank.
2. Canada: In 2008, Mark Carney was appointed as the Governor of the Bank of Canada. Carney, an economist, had previously worked in various roles in the Canadian Department of Finance and the Bank of Canada. His appointment from outside the central bank was seen as a fresh perspective to lead the institution.
3. South Africa: In 2014, Lesetja Kganyago was appointed as the Governor of the South African Reserve Bank. Kganyago, an economist, had previously served as the Director-General of the National Treasury in South Africa. His appointment as the Governor of the central bank was seen as a recognition of his expertise in economic policy and financial management.
4. Brazil: In 2016, Ilan Goldfajn was appointed as the Governor of the Central Bank of Brazil. Goldfajn, an economist, had previously worked in various roles in academia and the private sector. His appointment from outside the central bank was seen as a move to bring fresh ideas and perspectives to the institution.
These examples highlight instances where individuals with backgrounds in economics, finance, or public policy were appointed as governors of central banks, despite not having prior experience as central bankers. These appointments often reflect the government's desire to bring in individuals with diverse expertise and perspectives to effectively manage monetary policy and address the specific needs of the economy of the country.
Therefore, not being a central banker is not necessarily one of the criteria for being appointed as a central bank governor. While having experience in central banking can be advantageous, it is not the sole determining factor for the appointment of a central bank governor. There are entrenched establishment Directors and Deputy Directors already in the system who would form a strong team that should work harmoniously with the governor to make a successful tenure and turn around the ailing Nigerian economy.
The selection process for a central bank governor varies from country to country. In some cases, individuals with a background in economics, finance, or public policy may be considered for the position. These individuals may have worked in various sectors, including academia, government, or the private sector, and may bring a diverse range of skills and expertise to the role.
The appointment of a central bank governor often takes into account a combination of factors, including the individual's qualifications, experience, demeanor, temperament, leadership abilities, and understanding of monetary policy. Additionally, the appointment may also be influenced by political considerations and the specific needs and priorities of the country's economy.
While having experience as a central banker can provide valuable insights and understanding of the intricacies of monetary policy, it is not a prerequisite for the position. Many central bank governors have come from diverse backgrounds, bringing different perspectives and expertise to the role.
Ultimately, the appointment of a central bank governor is a decision made by the government or the relevant authorities, and they consider a range of factors to ensure that the individual appointed is well-suited to lead the central bank and effectively manage the country's monetary policy.