Sanusi Lamido Sanusi Photo: Sun News Publishing

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With a unanimous voice vote, the Senate after a three and half hours screening and drilling exercise, confirmed the nomination of former Managing Director of First Bank, Mr. Sanusi Lamido Sanusi, as the new governor of the Central Bank of Nigeria (CBN).

Also confirmed by the Senate after a 20-minute screening exercise was Mr. Tunde Lemo as deputy governor.  

Mr. Sanusi, who stood throughout the screening exercise that tasked his professional competence said the country will be far more effective in resolving its problems if the Yar’Adua administration concentrates on two or three of the seven-point agenda in the next four years with greater results.

The new CBN governor also said there is the urgent need for the government to address critical infrastructural problems, saying that once that is achieved, the country will begin to solve the problems, adding that the absence of linkages in the country does not allow for economic growth.

According to Sanusi: “My view is that until we address the infrastructural problem in this country, we will not even begin to solve our problems. As a matter of fact, my view is that in the seven-point agenda, if we could just focus on two or three things and finish them up in the next four years, we will be far more effective in contributing to this country than focusing on seven.

“We produce gas and export it, we do not have power plant. We produce crude oil, we import refined petroleum products. If we can set up power plant, set up our refineries, their multiplier effects on the economy and on growth is amazing, and if we don’t do that we cannot grow,” he noted.
He further said small scale industry in the country cannot survive without power, saying that the development calls for the fact that infrastructure is a priority, stressing that until the country addresses the infrastructure problem, the desire to achieve vision 20-2020 will be a mirage.  

The new CBN governor also said Nigeria had inflation pressures from a number of problems, saying that owing to our own inflation index, Nigeria has the highest component of food among all the people in the world.

“In Nigeria where you have food crisis, when food prices goes up, inflation rises. Inflation was 16 per cent in December, by April it come down to 13 per cent. That has been fuelled partly by the depreciation of the value of the naira which has its own costs, even though that has been mitigated by the low cost of transport,” Sanusi said.

He described inflation as a hydra-headed monster which the CBN has shown keen interest in, adding that there is tremendous amount of growth in money supply which is likely to be inflationary, stressing that in a time of economic meltdown, even though there is a necessity to have price stability, the priority of the CBN is to make sure that there is sufficient liquidity in the system that would enable the banks to continue lending to the private sector.

“If you have a credit crunch, it will become a full blown recession. So, it is a very difficult balance and this is one of the challenges we are going to have. How do we balance the concerns of inflation and the concerns of growth? There is no magic wand to this. On the exchange rate, every major currency has lost value and the naira strengthened from about 135 to the dollar to about 117 over five years before the adjustment in prices. That adjustment was absolutely necessary irrespective of what other policies were there which are now being reversed,” Sanusi said.

He further said: “The truth was with oil prices coming down from 147 dollars to under 50 dollars, our foreign reserve situation was at risk, and if your salary is halved, you have to cut down on your expenditure. Otherwise you will go broke. Adjustment is, therefore, necessary. You can see that the naira has now been strengthened. It is 155 to the dollar as at today.”

The former managing director of First Bank said people don’t really care about the rate of exchange but more concern with stability to allow for better planning and managing expectations, adding that the process is being carried out extremely well, saying that the best thing is to continue along that line.

Sanusi further explained: “I always say that it is extremely important to remember that the financial system is a transmission mechanism from the monetary policy to the real sector. It does not provide all the answers. The policy on infrastructure, a regulatory frame work, the GDP frame work and the budget of the government are all parts of this project. What I think the CBN will have to do is to increase the level of co-operation between the CBN and other arms of government. And to recognise that the financial system is not an island on its own, our monetary policy has to be part of the entire economic policy and part of my role will be to tell the government what you need to be done if you want banks to lend for infrastructure.”  

 He said there is the need for Nigerians to think of economics not as a discipline in the theory books, saying that economic growth and economic development is not about looking at GDP and other theories, adding that at the end of the day there are 150 million Nigerians.

According to Sanui: “The question I ask is how many Nigerians who did not eat three square meals a day now have three square meals? How many Nigerians who did not have a roof over their heads now have a roof over their heads? How many Nigerians who did not have education now have education? If you GDP is growing by 20 per cent, and 90 per cent of the population is living in poverty, I don’t believe that there is development.”

Mr. Sanusi said it is premature for Nigeria to embark on re-denomination, saying that only countries that suffered hyper-inflation of 700 percent per annum, 1000 percent per annum did it thus slashed five zeroes, eight zeroes, ten zeroes, adding that he does not think that Nigeria has conquered inflation.

Sanusi commended former Governor of the CBN, Professor Charles Soludo, stressing that the country should thank him for a tremendous job well done, adding that, “I think he was a very good governor. I think the CBN under his leadership has improved more. I think he has established a foundation on which we are to build.”

The new Central Bank governor, however, said it will be very unwise to increase the number of banks when we should be considering strengthening and building the 23 in existence, adding it should be noted that while a good bank requires a lot of money, it must be understood that not all banks with lots of money are good while some with small money are good.