Folashodun Adebisi Shonubi, who was appointed acting governor of the Central Bank of Nigeria (CBN) by President Bola Tinubu is not your typical banker.
The CBN deputy governor (operations) trained as a mechanical engineer, went into marketing, moved into information technology — and became a central banker.
Shonubi took to the helms following the suspension of Godwin Emefiele, the governor, penultimate Friday. By law, one of the deputies must complete Emefiele’s tenure, which expires May 2024.
The central bank has four deputy governors but Shonubi was considered above Aishah Ahmed, Edward Adamu, and Kingsley Obiora.
Shonubi, born on March 7, 1962, is a product of the University of Lagos.
He attended the university from 1978 to 1983, receiving a BSc in mechanical engineering before studying for an MSc in the same field at the same university.
After working as a consultant engineer at Mek-ind Associates from 1984 to 1989, he changed his line of education and profession by studying for an MBA with a focus on finance.
With an MBA in his hands, he moved into the IT industry which would later shape his career.
THE OPERATIONS MAN
He was a marketing executive at Inlaks Computers Ltd from 1989 to 1990 and took a giant leap when he was appointed head of treasury operations at Citibank Nigeria Ltd in 1990.
In 1993, he moved to Agusto & Co. Ltd as a supervising consultant, working there for three years before joining MBC International Ltd as deputy general manager, banking operations and IT.
In 1999, he was on the move yet again, taking up the position of vice president, operations and information technology at the First City Monument Bank (FCMB) Ltd.
He left FCMB in 2003 for Ecobank Nigeria Plc, where he became executive director, operations and information technology.
Shonubi was also director, information technology and corporate services at Renaissance Securities Nigeria Ltd as well as executive director, operations, technology and services at Union Bank of Nigeria Ltd from 2009 to 2012.
Before he was appointed into CBN in October 2018 by President Muhammadu Buhari, he was MD/CEO of the Nigeria Inter-Bank Settlement System (NIBSS).
Pending the appointment of a new CBN governor or the unlikely recall of Emefiele, who was suspended by Tinubu Friday night, Shonubi is now the chief central banker of Africa’s biggest economy.
Global Central Banks in Crisis
The job of central bankers is to keep banks stable and inflation low. Today they face an enormous battle on both fronts. The inflation monster is still untamed, and the financial system looks precarious.
Stubbornly high inflation led the Federal Reserve to increase interest rates by a quarter of a percentage point on March 22nd, less than a week after the European Central Bank raised rates, too. The Fed acted days after three midsized American banks had collapsed and Credit Suisse, a grand old Swiss bank with more than SFr500bn ($545bn) in assets, suffered a wounding run that ended in a shotgun wedding with its Swiss rival, UBS.
Expectations from Acting CBN Governor
Exchange rate, price stability, interest rate, and economic growth, are top priorities as the financial market and the public await the appointment of the next governor of the Central Bank of Nigeria (CBN).
Managing Director, chief economist, Africa and Middle East Global Research, Standard Chartered Bank Razia Khan, “The most important task for the new CBN governor will be to resolve Nigeria’s foreign exchange (FX) harmonisation and to restore better functioning to the Investors and Exporters (I&E) window.”
She said, “They will likely have to do this at a time when Nigeria’s FX reserves are constrained and the ability to raise market rates to more attractive levels is not in place, given the damaging impact on debt service costs. Nonetheless, it is essential that Nigeria does proceed with FX reforms.
“Cleaning up the CBN’s balance sheet – to the extent to which it got involved in lending in the economy – will also be key.”
Khan said the reforms will not be easy – but remain necessary if Nigeria is to draw a line under recent economic management and put conditions for longer-term macroeconomic stability in place.
Shonubi seem to have gotten down to business almost immediately, announcing the unification of all segments of the Nigerian forex market.
The apex bank, in a statement penultimate Wednesday, announced the collapse of all windows into the Investors & Exporters (I&E) window.
This move is part of the Nigerian government’s efforts to improve liquidity and stability in the market and attract foreign investors into the Nigerian economy.
The apex bank also stopped the RT200 programme and the naira4dollar remittance scheme from 30 June, 2023.
These schemes, which incentivised remittances and encouraged the inflow of foreign currency, will no longer be in operation, it said.
New Model
The CBN also announced reintroducing the “Willing Buyer, Willing Seller” model at the I&E window. This model allows eligible transactions to access foreign exchange based on the guidelines outlined in the circular dated 21 April 2017.
Allowing market forces to determine exchange rates under this model is expected to enhance transparency and promote fair pricing in the forex market.
Under the new framework, the bank said the operational rate for all government-related transactions would be determined by the weighted average rate of the preceding day’s executed transactions at the I&E window, calculated to two decimal places.
The CBN also significantly changed trading limits on oversold and overbought foreign exchange positions.
The proscription of trading limits on oversold positions provides more flexibility, allowing market participants to hedge short positions with over-the-counter (OTC) futures.
On the other hand, limits on overbought positions have been set to zero, preventing excessive accumulation of foreign exchange.
To ensure transparency and seamless execution of trades, the CBN also reintroduced order-based two-way quotes, with a bid-ask spread of N1.
Additionally, all transactions in the forex market will be cleared by a Central Counter Party (CCP), adding an extra layer of security and standardisation to the trading process.
The bank said the operational hours for forex trades would be from 9 am to 4 pm Nigeria time, providing a defined timeframe for market participants to engage in foreign exchange transactions.
The CBN further assured market participants and the general public that further guidance would be communicated promptly.
Policy Reset
The decision of the CBN aligns with the commitment made by Mr Tinubu to unify the various exchange rates prevalent in the Nigerian market.
For years, experts and global financial institutions have raised concerns about the nation’s opaque exchange rate regime.
President Tinubu had, during his inauguration speech, unveiled a plan to harmonise the nation’s multiple exchange rates as part of the broad plan to transform Africa’s largest economy.
Lifts restriction on domiciliary accounts, allows $10k daily withdrawals
The CBN immediately followed its initial action with a fresh directive to remove restriction into domiciliary accounts.
The apex bank said this in guidance to Deposit Money Banks (DMBs) after a meeting with the bankers’ committee on Sunday.
The guidance includes allowing all visible and invisible transactions to be eligible for the Investors’ and Exporters’ window, granting unrestricted access to funds in ordinary domiciliary accounts, and permitting cash deposits not exceeding $10,000 per day or its equivalent via telegraphic transfer.
According to the CBN, the policy changes aim to promote transparency, liquidity, and price discovery in the FX market in order to improve FX supply, discourage speculation, enhance customer confidence and ensure overall stability in the FX market.
“All visible and invisible transactions (medicals, school fees, BTA/PTA, airline, and other remittances) are eligible for the investors’ and exporters’ (I&E) window.”
Experts canvass more engagement with stakeholders
“We need a CBN governor that has a thorough understanding of monetary economics so that when the monetary policy is being discussed, he will have a good understanding. Under Emefiele, we did not have that, “
Chief executive officer of the Centre for the Promotion of Private Enterprise, Muda Yusuf, said: “The country needs a CBN governor who engages with the stakeholders because the monetary policy has wider implications on the various sectors of the economy.
“We would like to see better collaboration between the fiscal and monetary authorities. We want to see somebody who will have a good balance between inflation objective and growth objective so that there will not be too much fighting of inflation to the detriment of growth.”
He said the CBN should de-emphasise development finance, adding that it is better to have a properly structured development finance institution like the Bank of Industry, Development Bank of Nigeria.
Ayodele Akinwunmi, relationship manager, corporate banking at FSDH Merchant Bank Limited, expects financial stability, price stability and economic growth from whoever will be the next CBN governor.
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