Central Bank Governor appointments in Africa, USA & UK; let's go on a journey...
This is a repeat article originally published on September 25, 2015 and still available on this blog. I felt it was pertinent to bring the article back to the top due to a particular policy action from the Central Bank of Nigeria (CBN) which reminded me of this article. A few add ins in the last two paragraphs.
Why will the Central Bank Governor allow banks to sell dollars received from the CBN to their customers at self-determined rates? There should be a narrow defined spread between the daily inter-bank closing stop rate and rates at which dealing banks sell to their customers. Nigerian banks are once again being given an opportunity to 'milk' the system. A policy decision that affects the nation is actually enriching pockets of interest and sending more pockets of people into penury. Greed has become ubiquitous while patience needed by policy makers and the populace has gone AWOL. Read on.
Dear Africa Interested Individuals:
Why will the Central Bank Governor allow banks to sell dollars received from the CBN to their customers at self-determined rates? There should be a narrow defined spread between the daily inter-bank closing stop rate and rates at which dealing banks sell to their customers. Nigerian banks are once again being given an opportunity to 'milk' the system. A policy decision that affects the nation is actually enriching pockets of interest and sending more pockets of people into penury. Greed has become ubiquitous while patience needed by policy makers and the populace has gone AWOL. Read on.
Dear Africa Interested Individuals:
Appointments typically send a particular message to the general
public. It shows the direction the person appointing wants to go with
the organization in question. Appointments of a federal nature are
supposed to be driven by national best interests and not personal
best interests even though the appointments are made by people. I
picked six countries and four are in Africa to review their Central Bank
appointments which were all made in the past two years (this was not a
preset criterion for selection.) I picked the USA, U.K., Nigeria,
Kenya, Angola and South Africa. I picked the USA and U.K. because they
are developed countries with advanced financial systems that should
understand by now the proper way to do things. I picked Nigeria as the
largest economy and most populous nation in Africa, Kenya as the
dominant economy in East Africa and a prominent frontier market, Angola
as a major Africa oil producer and oil dependent economy and South
Africa as the continent's most advanced economy. Let me take you
through my thinking about Central Bank appointments in a nutshell. The
first is necessary, the rest come highly recommended.
- Appointee should have worked at a Central Bank, Government Finance or Economic Team, IMF or World Bank prior to appointment.
- Have a doctorate degree.
- Have worked in academia at some point during their career.
United States of America
Dr.
Janet Yellen's appointment took effect on February 3rd, 2014 for a
four-year term. She is the first woman appointed to the position in the
history of the United States of America. She received a Ph.D. in
Economics from Yale University in 1971. Her research and work has
focused on reducing unemployment and promoting "responsible economic growth" to
improve people's lives. She has taught at the Haas School of Business,
University of California, Berkeley. Most of her career has been spent
within the Federal Reserve System of the United States of America. She
was the Vice Chair of the Federal Reserve System before her appointment as the 15th Chair of the Federal Reserve. She fulfills all three of my criteria.
United Kingdom
Mark
Carney is the Governor of the Bank of England; he assumed office on
July 1st, 2013 and is the first foreign born governor of the Bank of
England. He is Canadian and was the Governor of the Bank of Canada for
five years (2008 - 2013) just prior to accepting the appointment to head
the Bank of England. He schooled at Harvard University and the
University of Oxford. He worked for Goldman Sachs for thirteen years
and also worked at the Canadian Department of Finance where he was
seconded to after joining the Bank of Canada as a Deputy Governor in August 2003. Mark Carney fulfills my necessary
condition for appointment but not the recommended. His predecessor
(Mervyn King) holds a doctorate degree and taught at London School of
Economics, Harvard and MIT as a visiting professor.
Kenya
Dr.
Patrick Ngugi Njoroge is the Governor of the Central Bank of Kenya. He
assumed office in June 2015. He worked at the International Monetary
Fund (IMF) for twenty (20) years prior to his appointment. He
has a doctorate in Economics from Yale University like Janet Yellen. He
is well prepared for the office of Central Bank Governor in my
opinion. His predecessor worked in academia prior to his appointment.
Kenya's Central Bank Governor fulfills my necessary and one of my ideal criteria.
Angola
Jose
Pedro de Morais is the President of the National Bank of Angola (this
is Angola's Central Bank) and assumed office in January 2015. He was
the Minister of Finance for Angola from December 2002 - October 2008
which is referred to as Angola's "boom period." He has worked as a
Governor at the World Bank and an Executive Director at the IMF. He is
referred to as an Angolan politician having served the government of
Angola in multiple capacities over the years. He is well known to the
'West' and is respected internationally. He fulfills my necessary condition for appointment but not the recommended.
South Africa
Lesetja
Kganyago assumed office as the Governor of the Reserve Bank of South
Africa in November 2014. He is an Economist by profession. He served
as the Deputy Governor of the South Africa Reserve Bank (SARB)
for three-and-a-half years just prior to being appointed the Governor of
SARB. He has a Master of Science in Economics from the London School
of Economics. He has spent pretty much his whole career working for the
South African Government in various positions such as: Director of
South African National Treasury, Chief Director: Liability of the
National Treasury and Director-General of the National Treasury of South
Africa. He has ample experience at the SARB prior to his appointment.
He fulfills my necessary condition for appointment but not the
recommended. His predecessor (Ms. Gill Marcus) was the first woman ever
appointed to that position and was the Deputy Minister of Finance for
South Africa and Deputy Governor of SARB prior to eventually being
appointed the Governor of SARB. South Africa's pattern is clearly seen
and fulfills my necessary condition. Ms. Marcus upon her
departure, thanked the President for appointing her successor from
within the institution, "that it showed trust in the institution."
Observers also noted that the appointment of an insider shows continuity
and that the SARB is in a safe pair of hands given the smooth
transition.
Nigeria
Godwin
Emefiele assumed office as the Governor of the Central Bank of Nigeria
on June 3rd, 2014. He is a Banker by profession having been an employee
of Zenith Bank since the bank commenced business in 1991. He is said
to be related to the Chairman/Owner of Zenith Bank: Jim Ovia. He was
the CEO of Zenith Bank just prior to his appointment. He has an MBA in
Finance from the University of Nigeria, Nsukka (UNN.) He is said to
have taught finance at UNN prior to beginning his banking career. He
has taken Executive Education courses at Stanford, Harvard and Wharton.
He does not fulfill my necessary condition for appointment as he has not worked at the Central Bank prior to his appointment to head the
Central Bank, nor has he worked at the IMF, World Bank or had a senior
government appointment. His predecessor (Sanusi Lamido Sanusi) followed
the same pattern as he too was the CEO of a commercial bank (First
Bank) prior to his assumption of office in June 2009. These last two
appointments are in contrast to Charles Soludo who was a Professor of
Economics at UNN (visiting professor at Swarthmore College in
Pennsylvania,) Chief Economic Adviser to President Obasanjo and the CEO
of the National Planning Commission of Nigeria prior to assuming the
position of the Central Bank of Nigeria. He fulfilled my necessary condition and both of my recommended.
These
last two Central Bank appointees were heavily politicized in my opinion
and the banking sector became a tool to be used as it pleases the
powers that be, instead of a tool to promote responsible economic growth
which should be the forerunner of any Central Bank's policies. The
forced takeover of three banks (not given the chance to recapitalize
like Wema & Unity Banks) and the refusal of banks to accept cash
foreign currency deposits (over the counter) has left many scratching
their head and the economy has taken a setback from these actions among
others.
Commercial Bank CEOs or top executives should not be appointed to head Central Banks. Every other country discussed in this article understands this except Nigeria where the people at the top keep taking decisions to please certain interests and not the good of the country.
This same appointment philosophy played out in the emergence of Aigboje
Aig-Imoukhuede as the President of the Council of the Nigerian Stock
Exchange. He is close to former President Goodluck just like Jim Ovia
(whose protege is now the Governor of Nigeria's Central Bank.) Both
were members of Goodluck Jonathan's economic management team. Another
member, Peter Obi is now the Chairman of the Securities & Exchange
Commission, Aigboje chairs the Nigerian Stock Exchange and Jim Ovia's
protege heads the Central Bank of Nigeria. I hope you are all following the story?
A
lot of money transfers in and out of the country, loans to governments
and related activities are handled by Zenith, First Bank and to a lesser
extent, Access Bank. Zenith Bank is now in the news for allegedly sponsoring a governor's election two years ago. Of course, they have swiftly refuted this allegation. Who tells the truth in Nigeria anyway? People like me that do, have been pursued and still being pursued by the 'powers that be' that feel that the sun rises and sets daily only for their benefit. Interestingly enough, an appointee (same time as
Emefiele as Governor) as Deputy Governor of the Central Bank (Adebayo
Adelabu) was the CFO of First Bank prior to assuming office as one of
the Deputy Governors of the Central Bank. Interest in the banking
sector has apparently superseded interest in the economy because bankers are
at the helm of the Central Bank of Nigeria and are naturally focused on
and gravitate more easily towards what they understand best: banking. The Central Bank Governor is not an internship position where people learn from the scratch on the job.
This "learning from the scratch" may leave the economy with scars that cannot be easily removed. Nigerians at the top, once again, pleasing pockets of interest instead of pockets of people who continue to grown under perennial maladministration. Posterity will not be kind to many of Nigeria's big shots. I doubt whether they care anyway; money is now their God.
This "learning from the scratch" may leave the economy with scars that cannot be easily removed. Nigerians at the top, once again, pleasing pockets of interest instead of pockets of people who continue to grown under perennial maladministration. Posterity will not be kind to many of Nigeria's big shots. I doubt whether they care anyway; money is now their God.
Tell others to tell others about this Africa Research Blog; the economic truth is here.
Comments
Post a Comment