On Friday last week, President Muhammadu Buhari nominated Fola Shonubi as a Deputy CBN Governor. His appointment, however, is subject to confirmation by the Senate.
He replaces Adebayo Adelabu who, according to reports, stepped down to contest for political office. Prior to his nomination, Shonubi was the Managing Director of the Nigerian Interbank Settlement System (NIBSS) Plc.
The nomination, also means that the Bank will have just one economist on its board: Okwu Joseph Nnanna who has a Ph.D. in Economics and is in charge of the Economic Policy Directorate.
CBN Governor, Godwin Emefiele, was the Group Managing Director of Zenith Bank prior to his appointment. Emefiele holds degrees in Banking and Finance.
Aishah Ahmad was an Executive Director at Diamond Bank Plc before her appointment as Deputy Governor in charge of the Financial Systems Stability Directorate. She has a B.Sc in Accounting, an MBA and an M.Sc. in Finance and Management.
Edward Lamtek Adamu, the Deputy Governor in Charge of Corporate Services, has a degree in Quantity Surveying from the Ahmadu Bello University, Zaria.
Between 1982 and 2004 the CBN Governor had been non-economists before Professor Charles Soludo was appointed. His appointment at the time was seen as groundbreaking. Before then, Late Mr. Ola Vincent was the last Economist appointed as CBN Governor. The immediate past CBN Governor and Emir of Kano HRH Sanusi Lamido Sanusi was also an economist.
In other climes
Central Banks across the world are not necessarily led by economists, but there are usually several economists on the board. Jerome Powell, current chair of the US Federal Reserve (equivalent to Nigeria’s CBN) was, prior to his appointment, an investment banker with degrees in law and politics.
The other two members, however, have a background in economics. Lael Brainard has an MS and Ph.D. in economics. Randal Quarles, prior to obtaining a Juris Doctor (JD) degree, received an A.B. in philosophy and economics from Columbia University.
Governor Lesetja Kganyago of South Africa’s Reserve Bank is an Economist. His three deputies: Daniel Mminele has a Diploma in Banking from the Chamber of Commerce and Industry, Biefield Germany. Francois Groepe has a BCom (Hons), MBA and LLM degrees and a Postgraduate Diploma in Tax Law. Kuben Naidoo holds an MBA, BSc and a Postgraduate Diploma in Public Management.
Coming to Ghana, Governor Yedu Addison has a Ph.D. in Economics ditto Maxwell Opoku Afari who is one of two deputy governors.
Elsie Awadzi, the second deputy governor has an LL.M. degree (International Business and Economic Law) with distinction from the Georgetown University Law Centre, an M.B.A. (Finance) from the University of Ghana, and an LL.B. Degree from the same university.
The Central Bank of Kenya Governor, Patrick Njorge has a Ph.D. in Economics.
Why does it matter?
Considering its pivotal role in deciding monetary policy for any country, economists are often seen as ideal fit for the executive positions at the Central Bank. Critics of the current CBN leadership often point to the dearth of economists as a factor in some of the unpopular decisions made over the last few years.
According to Nonso Obikili – Policy Associate Economic Research, Southern Africa ;
“The CBN does not have enough economists in decision making which is a bit odd for an institution whose primary role is monetary policy. This has reflected in the policies issued of late, such as the divergence between the CBN, OMO and MPC rates.”
However, whilst not a prerequisite, some believe the dearth of economist at the highest level of monetary policy in the country is worrisome. Senior Economics Contributor at Nairametrics, Wale Okunrinboye believes there should be a balance at the top.
“The CBN should have a good balance of economists at the top. Currently, there exists a weak mix compared to the norm in many countries. Having several economists means there would be a robust debate of critical decisions and tradeoffs required in crafting policy.”
But we have the MPC
Despite these concerns, the Monetary Policy Committee of the CBN is more inclusive with independent members drawn largely from professionals with economic backgrounds.
The MPC comprises the governor of the Bank who shall be the chairman; the four deputy governors of the Bank; two members of the board of directors of the Bank; three members appointed by the president; and two members appointed by the governor.
Currently Nigeria’s CBN Board of Directors includes Mr. Godwin I. Emefiele, Governor, as Chairman, Mr. Adebayo A. Adelabu (Now to be replaced by Fola Sonubi), Deputy Governor, Operations, Central Bank of Nigeria, Dr. Okwu J. Nnanna, Deputy Governor, Economic Policy, Central Bank of Nigeria, Mrs. Aisha N. Ahmad, Deputy Governor, Financial System Stability, Central Bank of Nigeria, Mr. Edward L. Adamu, Deputy Governor, Corporate Services, Central Bank of Nigeria.
The others, who are not part of the Management and thus independent of the bank are Prof. Dahiru Hassan Balami, Prof. Festus Adeola Adenikinju, Dr. Robert Chikwedu Asogwa and Dr. Aliyu Rafindadi Sanusi.
The independent members of the committee are expected to provide a balance during votings on key policy decisions of the Monetary Policy Committee. However, in a committee where more than half of those with the voting powers are part of the managing team of the Central Bank, it is always likely that monetary policy decisions will always swing the way of the CBN Governor and his deputies.
Critics opine this is perhaps why most of the current policies favoured by the Central Bank are unorthodox and do not always espouse free market principles. To make matters worse for advocates of Economists at the top echelon of the Central Bank, all but one of the deputy governors is an economist.