Nigeria’s Senate has approved the appointment of Olayemi Cardoso as the new central bank governor, along with four deputies, in response to the worsening depreciation of the country’s currency, the naira, against the US dollar. Cardoso, a former executive at Citi and a close ally of President Bola Tinubu, will face the challenge of stabilizing the naira, which has reached record lows in recent weeks. The gap between official and parallel market exchange rates has widened, and there is a chronic scarcity of foreign exchange. Cardoso’s immediate priority is to clear a backlog of debts owed by the central bank in the foreign exchange market.
The appointment of Cardoso comes after Tinubu, who took office in May, had taken steps to converge the official and parallel market exchange rates as part of broader economic reforms. However, these efforts have not been successful, and the naira continues to fall dramatically. Traders report that the central bank has not intervened in recent weeks, leading to a reliance on the black market for foreign currency. The government is working to attract liquidity from foreign investors and secure an oil-for-dollar loan scheme to inject liquidity into the economy. In addition to stabilizing the currency, Cardoso will also face pressure to address high inflation rates and separate monetary policy from fiscal interventions.
During the appointment process, senators questioned Cardoso on the central bank’s independence from the presidency and its previous close relationship with the government. They also raised concerns about the central bank’s past involvement in industrial policy, which restricted access to dollars for certain importers. Cardoso stated that there is a need to refocus the Central Bank of Nigeria’s (CBN) role to its core mandate and limit its direct involvement in development financing, instead emphasizing advisory roles that support economic growth.
In summary, the Nigerian Senate has unanimously approved Olayemi Cardoso as the new central bank governor and four deputies. Cardoso takes on this role amid the depreciation of the naira and widening gap between official and parallel market exchange rates. His immediate priority is to address the backlog of debts owed by the central bank in the foreign exchange market. The new governor also faces pressure to stabilize the currency, tackle high inflation rates, and redefine the CBN’s role to focus on its core mandate.