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Cardoso’s CBN Governor Nomination: Stock Market Implications for Nigeria



President Bola Tinubu on September 15, 2023, nominated Dr. Olayemi Michael Cardoso to serve as the new Governor of the Central Bank of Nigeria (CBN), for a term of five (5) years at the first instance, pending his confirmation by the Nigerian Senate.

Also nominated as deputy governors of the apex bank are Mrs. Emem Nnana Usoro, Mr. Muhammad Sani Abdullahi Dattijo, Mr. Philip Ikeazor, and Dr. Bala M. Bello.

The nominees are tasked with aligning their efforts with President Bola Tinubu’s “Renewed Hope Agenda,” to successfully implement critical reforms at the Central Bank of Nigeria, which will enhance the confidence of Nigerians and international partners in the restructuring of the Nigerian economy toward sustainable growth and prosperity for all.

The recent report that Mr. Emefiele had resigned last month has alleviated concerns regarding the appointment’s legality, as there cannot be two governors of the apex bank concurrently.

However, opinions and expectations are varied due to the widespread belief that individuals appointed to head the Central Bank of Nigeria (CBN) have not done quite well over the years.

While it is believed that an insider or non-banking sector expert would have been ideal, others contend that it is not about an insider but those who can get the job done.

Considering these diverse opinions, one crucial aspect remains certain and paramount: the appointees must possess a deep understanding of their roles to excel. Some of the core functions of the Central Bank of Nigeria (CBN) are traditional and require expertise that cannot be acquired on the job.

The fact that the President has prior experience working with Dr. Cardoso and the other nominees raises important considerations.

However, will the President’s judgment and confidence in them alone be sufficient?

Beyond the personal trust and conviction of the President, the future achievements or otherwise of the nominees will also be contingent on their sincerity of purpose and their ability to establish and maintain public trust.

In this context, first-hand assessments of the nominees, particularly the CBN Governor, can be based on their convictions, advocacy, and antecedents.

In an interview with Aston University, Cardoso emphasized the significance of being aware that others hold you in high regard.

He stressed the importance of consistently aligning one’s actions with exceptionally high ethical standards, a mindset well-suited for the job.

Dr. Cardoso served as a former commissioner for financial planning and budget in Lagos state during Tinubu’s tenure as governor from 1999 to 2007.

He spearheaded key initiatives including the Medium-Term Expenditure Framework (MTEF), the Security Trust Fund, and Public-Private Partnerships (PPP).

He was part of the team working on an economic blueprint for the new government. This experience is expected to provide him with valuable insights into the government’s true priorities and objectives.

Collaborating closely with Mr. Wale Edun, the highly rated Minister for Finance and Coordinating Economy within President Tinubu’s circle, holds the promise of significantly improving the coordination of economic policies.

This understanding is expected to usher in a seamless alignment between monetary and fiscal policies, a marked departure from the prior administration’s less evident coordination.

Such alignment fundamentally would promote economic stability by offering a consistent and coherent approach, effectively diminishing uncertainty for businesses and investors, thereby bolstering overall confidence in the economy.

This is expected to extend to the stock market, as the market reacts to publicly available information.

For example, following the arrest of former CBN governor, Mr. Godwin Emefiele, the Nigerian Stock Exchange All-Share Index (NGXASI) experienced a 4% intra-day gain on June 13.

Similarly, the nomination of Dr. Cardoso had an immediate effect on market sentiment. Following the announcement, the Nigerian stock market, represented by the NGX, closed Friday’s trading session on a positive note as investors ended a volatile week, with positive sentiment.

The All-Share Index (ASI) traded 0.09% higher, closing at 67,395.74 index points, compared to the previous day’s closing figure of 67,335.30 index points.

The extent to which Dr. Cardoso can facilitate seamless collaboration in addressing critical macroeconomic factors like inflation, exchange rates, and interest rates will undoubtedly have a significant impact on the Nigerian stock market.

As the central bank is scheduled to set interest rates again on September 26, market participants are keenly anticipating the decision. Some analysts are projecting a potentially more aggressive stance in this upcoming rate-setting decision.