Who’s in the frame to lead the Central Bank of Nigeria post-Sanusi?

In office since June 2009, governor of the Central Bank of Nigeria (CBN) Lamido Sanusi has earned a reputation as one of most controversial monetary policymakers in Africa, if not the world, who frequently makes disobliging remarks on issues outside his mandate, including on fiscal policy, structural reform, politicians’ pay, China’s extractive model in Africa and the western financial industry, among other things.

Striking fear and awe in equal measure among the financial and political class, Sanusi has undercut patronage networks that seek to undermine reforms in Africa’s soon-to-be largest economy.

Given Sanusi’s overarching involvement in economic policymaking in the country, some market players were caught off-guard when he announced in March he won’t seek to renew his contract when it expires in June 2014.

In meetings with bankers, analysts and government officials in Abuja and Lagos, a picture emerges of an industry fearful over the lack of clarity on the likely policy orientation and character of his successor, with a front-runner yet to emerge. “If I were the president, I would not let Sanusi leave,” says Bismarck Rewane, CEO of Financial Derivatives, reflecting market confidence invested in the governor and fears that the government might appoint an overtly political animal that will fail to agitate for reforms.

“If you take Sanusi out of the central bank, then does it have any power? You need a strong character to lead Nigerian institutions.”

Seen as Nigeria’s best-ever central bank governor, and uniquely placed to deal with the country’s financial crisis thanks to his fire-fighting skills, the twin aspects of Sanusi’s legacy comprise a root-and-branch overhaul of the banking sector – staving off complete collapse of the industry and spearheading its consolidation – and hard-fought exchange-rate stability.

Euromoney understands the president’s advisers say they are keen to recruit a senior banker, rather than an academic economist, in an attempt to address the structural failure of the banking system to act as an intermediary of capital in the real economy, and boost market confidence.

However, compared to the uniquely combative Sanusi, analysts suggest his successor is likely to strike a more conciliatory tone with the government and financial industry, more generally.

“The government obviously has a self-interest in appointing a diplomatic character, who straddles federal and market demands,” says Efemena Esalomi, analyst at Lagos-based Vetiva Capital Management.

The consensus top-two candidates are Atedo Peterside, chairman of Stanbic IBTC, and Aigboje Aig-Imoukhuede, CEO of Access Bank. Peterside has more than 30 years’ banking experience, serves as an unofficial adviser to the president and has impressed government officials by his deft stewardship of the National Council on Privatization, which helps to co-ordinate power sector reforms, a key plank in Nigeria’s industrialization bid.

Aig-Imoukhuede, whose supporters have openly lobbied on his behalf for the CBN position from January, has driven Access’s ascent to the top tier through its merger with Intercontinental, and is due to step down as CEO by December.

It is unclear whether the top management at the remaining first-tier Nigerian lenders – First Bank, GTB, Zenith and UBA – have the appetite to lead the CBN, and/or are in the midst of strategic expansion and consolidation plans, say analysts.

Other names include the ambitious industry and trade minister Olusegun Aganga – the former finance minister and Goldman Sachs banker – along with deputy CBN governor Kingsley Moghalu, who Euromoney understands is open to the idea but has yet to actively lobby, though he is a lawyer by training and lacks financial market experience. In any case, the CBN governor position is inherently political. Bankers and analysts in Lagos and Abuja think the fiscal status quo is unsustainable, as a turn in the global commodity cycle imperils the country’s growth model, with oil representing some 75% of government revenues.

Although two of the three benchmark reforms – the creation of a sovereign wealth fund to manage fiscal savings, and power sector reform, leaving the Petroleum Industry Bill lagging – are steaming ahead, reformists need to redouble efforts to diversify the economy and root out corruption.

The federal finance ministry and central bank are united in some battles. To wit, the CBN in July imposed a 50% cash reserve ratio on public sector funds held in commercial banks.

“We were concerned about potential for corruption and arbitrage,” says a central bank official. It’s a well-known racket: the proceeds of those returns are typically trousered by the banking clerk and civil servant involved in the given transaction. It’s just a small example of the generous system of entitlement for banks and public officials.

In sum, until there is a sea-change in the political and corporate culture, Sanusi’s successor needs a battle-ready disposition and the political capital to drive through reforms, given the personality-driven nature of Nigeria’s economic structure.