While the circumstances under which Mr Folashodun Shonubi was appointed Acting Governor of the Central Bank of Nigeria (CBN) appear to be similar to those that saw Dr Sarah Alade appointed to that position in February 2014, he is, however, taking charge of the apex bank at a time the banking industry regulator is facing unprecedented challenges. First and foremost, Shonubi was appointed Acting Governor of the CBN by a newly sworn in President Bola Tinubu, less than two weeks after the President had, in his inaugural address, promised a unified exchange rate and lower interest rates. This meant that from the inception of his administration, the President was already setting an agenda for the CBN. Also, Tinubu’s choice of Shonubi as Acting Governor of the apex bank, also meant that he had confidence in the abilities of the central banker.
Happy investors
Indeed, investors also welcomed Shonubi’s appointment as the Nigerian stock market rose to its highest level since July 2008 on the first day of trading after he was named as CBN Acting Governor. Furthermore, Bloomberg reported that Nigeria’s international bonds jumped the most among emerging-market peers in trading on the first Monday after his appointment, with the country’ longest-dated dollar debt rising to the highest since January, stating that the notes maturing in 2051 rose more than three cents on the dollar to as high as 73.74, the biggest gain this year. Even more exciting for the investors was the announcement by the CBN last Wednesday that it had collapsed all segments of the foreign exchange market into the Investors and Export-ers’ (I&E) window, thus unifying the country’s multiple exchange rates.
The regulator said in a statement that it was introducing operational changes to the I&E window that would allow investors to engage in the market at rates buyers and sellers set (willing buyer, willing seller arrangement), adding that individuals and businesses needing dollars for loan repayment, dividend payment, capital repatriation, or settlement of trade-related obligations were eligible to participate in the market. Commenting on the changes to the operations of the forex market, analysts at CardinalStone Research said: “On the ex- port front, we expect the naira unification, which also implies an effective devaluation to us, to increase the naira equivalent of Nigeria’s export proceeds. “The weaker currency will also increase the attractiveness of Nigeria’s export goods in in- ternational markets, cascading to greater demand from consum- ing nations barring responses from competitor countries to re- tain market share. We, however, note that there is likely to be an offsetting impact from the cost of imports.”
According to other analysts, the pro-market reforms he has introduced in less than a fort- night in office, coupled with his antecedents, indicate that Sho- nubi is likely to steer the CBN in the direction that investors have been looking for.
Profile
Prior to his appointment as CBN Acting Governor, Mr Sho- nubi had been the bank’s Deputy Governor (Operations Director- ate) since 17 October, 2018. The new CBN Acting Governor, who holds a Master’s in Business Administration from the University of Lagos and another Master’s degree in Mechanical Engineering from the same institution, is a veteran banker with over 30 years of professional experience.
Prior to his appointment as Deputy Governor in CBN, Shon- ubi was the Managing Director/ CEO of the Nigeria Inter-Bank Settlement System Plc (NIBSS) from 2012 – 2018. His banking career saw him appointed Executive Director, In- formation Technology and Operations at Union Bank of Nigeria Plc and a member of the Board of Union Homes and Director, In- formation Technology and Corporate Services in Renaissance Securities Nigeria Limited, with responsibility for the Group’ s IT infrastructure in Africa. In addition, between 1999 and 2007, he worked in MBC Interna- tional as Deputy General Man- ager and supervised their IT operational platforms, served in First City Monument Bank Limited as Vice President and in Ecobank Nigeria Limited as Executive Director. Shonubi, who also had a stint with Citibank Nigeria Limited, as its Head, Treasury Operations between 1990 and 1993, has served on a number of sub-committees of the Bankers’ Committee, including the Ethics and Professionalism sub-committee. Clearly, however, it was during the eight years that he was at the helm of affairs at NIBSS that most Nigerians, outside the financial sector, became familiar with his name.
Established in 1993 and owned by all Nigerian licensed banks and the CBN, NIBSS, which commenced operations in June 1994, is a shared service infrastructure, set up to provide electronic payments, transactions switch- ing, payments aggregation, payments sweeping and settlement services and shared-service plat- forms for the financial services industry. Specifically, part of the company’s mandate includes, providing infrastructure for the auto- mated processing and settlement of transactions between banks acting on their own account as regards deposit placements, Treasury Bills transaction, naira settlement on inter-bank foreign exchange transactions; initiating and developing an integrated nationwide network for the electronic or paperless payments, funds transfer and settlement of transactions, as well as providing a framework for elevating the level of efficiency in funds transfer services.
BVN
With NIBSS being the primary custodian of Bank Verification Number (BVN) service in the country, the directive by the CBN in February 2014 that all bank customers must be enrolled on the BVN platform to be able to access banking services and the interest that the enrollment process generated, meant that the performance of NIBSS was under the spotlight between 2014 and 2016. Given that total BVN enrolment rose steadily during Shonubi’s time as NIBSS CEO and that the Director, Payment Systems Management Department at the CBN, Mr Musa Jimoh, told journalists last month that the BVN was one of the most impactful initiatives of the apex bank, as it had significantly helped to reduce incidents of fraud and money laundering in the banking industry, it means that NIBSS, under Shonubi’s leadership, effectively played the role that was required of it by all stakeholders. For instance, commenting on the benefits of the BVN project in an interview with a national daily in June 2015, Shonubi stat- ed: “First and most important of all is for us to identify our cus- tomers uniquely across banks and across accounts. So, once a customer enrols and obtains a BVN, that same BVN is tied to all his bank accounts. “Now, relating to identifying is the possibility of banks blacklist- ing people who have committed financial infractions. It could be fraudsters; it could be people who have forged documents; etc. “What happens today is that Mr. A goes to Bank E, commits fraud, then runs to Bank F and because there is no way of tying all these activities across, we found out that there are quite a lot of losses related to these in- dividuals from one Bank to an- other. BVN removes these losses.
“The beauty of it all is the unique identification in the financial space. Generally, people say every Nigerian is a crook but in actual sense, maybe only one per cent of Nigerians are crooks but the remaining 99 per cent are considered crooks because of that one per cent. So, BVN allows us, again, to find these individu- als and to create that blacklists that other stakeholders in the financial space can have access to. With this, even foreigners through their banks, may be able to identify fraudsters that have been tracked in the Nigerian Fi- nancial space.” He further stated: “Secondly, the BVN would allow us begin to build retail credit. Today, the banks have concerns over identi- fication in retail lending, that is why the entire retail consumer lending portfolio is targeted at people with formal employment whose employers can serve as a point of reference. “There are however a lot of self-employed people as well as others working in smaller orga- nizations who require this, but do not have access due to the identification issue, as no bank will take the risk of lending to them – considering cases of res- ignation and eventual run off, how will the banks get repay- ment? But with the availability of BVN, these set of individuals will also benefit from retail lend- ing as identification and track- ing issues will be mitigated. “The third, which I have al- ready alluded to, is we want to be able to authorise financial transactions down the road, on an Automated Teller Machine (ATM) or a Point of Sales (PoS). “You can use your biometric identifier to say ‘Yes, this is me and I am authorising the pay- ment.’ So, those are the three key focus areas that led to the BVN project being conceived and implemented.”
Conclusion
In fact, the expectation in financial circles, over the weekend, is that given the explosion in electronic payments in recent years, especially in developing countries, the new CBN Acting Governor’s extensive experience in Information Technology (IT) is one of the qualities that will help him lead the apex bank to achieve its 95 per cent financial inclusion target by 2024.
