BusinessExecutivesFinance: Lamido Sanusi's legacy of reform at Nigeria's Central Bank

Sun,19Nov2017

Posted on Friday, 15 November 2013 13:59

Finance: Lamido Sanusi's legacy of reform at Nigeria's Central Bank

By Nicholas Norbrook

Lamido Sanusi GOVERNOR, CENTRAL BANK OF NIGERIA. Photo©Vincent Fournier for JA‪Lamido Sanusi's tenure as governor of the Central Bank of Nigeria was spent on reforms that saw a renewal of international confidence in the West African country's banking system. He talks to The Africa Report about the legacy he would like to leave behind.‬

 

The Africa Report: What three reforms do you wish to see outlast you?

Well, first of all, the first few years of my term were obviously consumed by trying to save the system from the banking crisis.

Going through the process of actually fixing a crisis without depositors losing money and getting the banks to pay for that is a major thing.

So one would like to see the agreement that the Nigerian banks over the next 10 years are the ones that pay for the cost of the bailout continue after I've gone.

The second thing is the whole transparency of monetary policy.

We've got to a point where people understand that if we move up the MPR [monetary policy rate] by 5%, they will see a movement in the short-term rates.

We've improved monetary policy implementation.

We have improved how we communicate.

People are able to see how we think and how we arrived at decisions, and the markets are able to debate and have intelligent conversations around that.

The third major thing is the whole process of financial inclusion – consumer protection, financial literacy, payments and transformation.

What about IMF concerns surrounding AMCON?

There are three issues we had with the IMF, two of which we agreed upon totally, one where we had a slight disagreement.

We had to clean up a few loans that were a risk to the system, and we gave a deadline and we said beyond that AMCON will not chase any more loans – because they didn't want to have an open-ended fiscal risk.

The second issue we had to document with them was on tenure.

They wanted AMCON to repay all debts in those seven years.

Now, our models show that it was not possible without placing the healthy banks at risk by significantly increasing their contributions, and we didn't want to put too much pressure on the banks.

The third issue was a sunset clause.

The IMF wanted AMCON to be wound down, basically cancelled, after the pay-off loan.

I felt it's a vehicle that has to be available to central bank governors in the event of a crisis. ●



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