Nigeria’s Buhari Nominates Emefiele for Second Term as Bank Governor

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Nigeria’s President Muhammadu Buhari nominated central bank Governor Godwin Emefiele for a second five-year term, making him the first monetary-policy chief to have his contract renewed since the end of military rule two decades ago.

Senate President Bukola Saraki read Buhari’s choice of Emefiele to lawmakers on Thursday. His appointment is subject to the Senate’s approval. There was speculation of other possible candidates for the role, with Buhari facing pressure to replace Emefiele, who’s from the south of the country, with a northerner. High-profile public positions in Nigeria are often rotated between the two regions.

Buhari’s decision to stick with Emefiele lessens the chances that Africa’s biggest oil producer will scrap its system of multiple exchange rates, according to Mathias Althoff, a money manager at Stockholm-based Tundra Fonder AB, which owns Nigerian stocks.

“The likelihood of either the Buhari administration or the central bank under Emefiele doing anything other than what we’ve seen in the past four years is very low,” Althoff said. “The independence of the central bank is, rightfully, questioned. I don’t believe Emefiele is strong enough, nor has he indicated any will to make any major changes to the current foreign-exchange regime.”

The central bank head was previously managing director of Zenith Bank Plc, Nigeria’s second-biggest lender by market value. Since being appointed in 2014, he raised the key interest rate to a record high to contain price growth and bolster the naira.

His decision to tighten currency controls by restricting importers of about 43 items from buying foreign exchange, and his defiance of calls to devalue the naira, may have earned him Buhari’s support to stay on.

The renewal of Emefiele’s term gives a platform for monetary stability at a time that it’s most required, Ogho Okiti, head of Abuja-based Time Economics, told Bloomberg in a text message.

“His reappointment provides the president with a person that has the greatest understanding of his policies and how those policies have shaped Nigeria’s economic growth in recent years and the changes required,” he said.

The 57-year-old will continue facing the trade-off between lowering inflation that’s been above the target band of 6% to 9% for more than three years and boosting an economy whose growth is lagging emerging-market peers. The Monetary Policy Committee, which lowered its key rate to 13.5% from 14% in March, is scheduled to make its next rates announcement on May 21.

Emefiele will continue to pursue the central bank’s development-finance agenda, including lending at subsidized rates to different sectors of the economy, Robert Omotunde, an analyst at Afrinvest West Africa Ltd., said by phone from Lagos.

“We don’t expect a free floating exchange-rate regime,” he said. “We do not expect any relaxation of the banned 43 items. For investment and attraction of capital into the country, it is not so positive.”

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