Nigeria’s Senate has unanimously approved the appointment of a new central bank governor, Olayemi Cardoso, and four deputies in response to the country’s deteriorating currency. Cardoso, a former executive at Citigroup and ally of President Bola Tinubu, takes over after the resignation of previous governor Godwin Emefiele. The new governor faces the challenge of stabilizing the naira, which has hit record lows against the US dollar. The currency’s recent decline has led to a shortage of foreign exchange and a widening gap between official and parallel market rates.
Traders in Nigeria’s parallel market claim that the central bank has not intervened in recent weeks, leaving businesses and individuals reliant on the black market. The weakening of the currency is partly attributed to the central bank’s debt of $6.8 billion in the foreign exchange market. Cardoso’s immediate priority is to clear this backlog and attract liquidity from foreign investors. However, foreign investors have been hesitant to invest in Nigeria, and an oil-for-dollar loan scheme for the state oil company has yet to materialize. Additionally, the central bank must address inflation, which is currently at an 18-year high of over 25%.
Cardoso has vowed to adopt an evidence-based monetary policy and prioritize the central bank’s core mandate. Senators have questioned whether Cardoso and his deputies will maintain independence from the presidency and break from the previous governor’s approach of intruding on industrial policy. Emefiele had imposed restrictions on importers accessing dollars for various goods. Cardoso intends to move the central bank away from direct development financing and into a more limited advisory role that supports economic growth.