Can new central bank governor rise to Nigeria’s challenges?

Olayemi Michael Cardoso has previously worked with President Tinubu but faces severe challenges in helping him tackle Nigeria’s deep-rooted economic issues.


Image : Olasunkanmiariyo/AFP

Nigeria’s President Bola Tinubu has nominated Olayemi Michael Cardoso to be the next governor of the Central Bank of Nigeria (CBN) as he continues in his attempts to reform Africa’s largest economy.

The appointment comes at a time when Nigeria is grappling with macroeconomic difficulties on several fronts. Teniola Tayo, economic intelligence lead at the Office for Strategic Preparedness and Resilience (OSPRE) in Abuja, tells African Business that “the to-do list for the new central bank governor is definitely long and filled with tough tasks, including fixing the relationship between interest rates and inflation.”

“At the moment, the business case for naira-based investments and assets is weak, as a result of some of the poor choices that were made by the previous management of the central bank. The new CBN governor therefore needs to rise to the challenges of once again making the Nigerian economy an attractive destination for foreign capital, at least from a macroeconomic perspective,” she adds.

“Systematic interventions aimed at strengthening the naira and making it a more reliable store of value will be key. His performance on this will affect other issues such as jobs, growth, and the overall health of the economy.”

Cautious optimism

The reaction to Cardoso’s appointment within the business and finance space in Nigeria appears to have been largely positive, although there are question marks as to whether the new governor will be able to tackle Nigeria’s deep-rooted economic issues successfully.

Rotimi Ogunyemi, a technological attorney and chair of the Nigerian Bar Association Section on Business Law’s ICT Committee, says he is “cautiously optimistic” about the new governor.

He says that Cardoso – who studied at Harvard before rising in finance to become the chairman of Citibank in Nigeria – has an extensive background in banking, public policy, and economic planning that “positions him well to tackle Nigeria’s economic challenges.”

“His expertise could instil a renewed sense of trust among investors, stakeholders, and the Nigerian populace at large,” Ogunyemi adds.

Much work to do

Adedeji Owonibi, founder of Abuja-based consultancy firm Convexity, believes that the appointment is a good symbolic move that demonstrates Tinubu is serious about pursuing economic reform. He notes that the governor and the president – who worked together previously when Cardoso was commissioner for budget and national planning and Tinubu was governor of Lagos State – “will align together very easily.”

However, Owonibi thinks that the jury will still be out until such time as Nigeria’s systemic issues are resolved.

“There’s cause to hope that something may change in economic policy, but we need to see the details and see the plans come into action,” he tells African Business. “For example, the president committed to harmonising exchange rates and there was a lot of noise when the multiple rates were unified. But in practice, there’s still a big disparity between official and unofficial rates. The official rate is normally somewhere around N700 to the dollar, but in other markets it’s more like N1000. There’s still lots of dislocation.”

Calls from the president and the new governor for fiscal discipline and economic reform are welcome, “but there’s still so much work to do,” he says.

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Harry Clynch

Harry is Finance Reporter at African Business.