President Jonathan's suspension of the CBN governor raises concerns not just over the economy and elite vested interests, but also the rule of law.
In what has been seen by most as a baldly political move, President Goodluck Jonathan shocked both markets and observers yesterday as he suspended Nigeria's widely-celebrated Central Bank Governor, Sanusi Lamido Sanusi.
In a press release Jonathan's spokesman claimed that "Lamido Sanusi's tenure has been characterised by various acts of financial recklessness," but offered no details or specifics, and many commentators believe the real reason for Sanusi's removal was his outspokenness on institutional corruption.
"Sanusi's persistent criticism of Nigeria's opaque oil revenue management and allegations of unremitted NNPC [Nigerian National Petroleum Corporation - the state-owned oil company] oil proceeds made him a public enemy of the political elite," says Samir Gadio, Emerging Market Strategist at Standard Bank. "His suspension is a disruptive move which indicates that the Central Bank has de facto lost much of its independence."
Sanusi, who was due to step down when his term expired this June anyway, was swiftly replaced by Central Bank of Nigeria (CBN) deputy governor Sarah Alade, but this did little to reassure the markets. Following Sanusi's suspension, the naira saw its largest daily decline since a December 2009 devaluation, while trading in Nigeria's foreign exchange, money and bond markets halted amidst the uncertainty.
Meanwhile the latest reports that have emerged are claiming that Sanusi - who was in Niamey, Niger, where he was attending a West African regional summit - has had his passport confiscated.
You can't suspend the truth
Sanusi became governor of the Central Bank in June 2009 at a time when the Nigerian Stock Exchange was the worst performer in the world, oil was at only $40 per barrel, and the Nigerian banking system was about to implode under its own weight of bad debts, mismanagement and fraud.
On taking office, Sanusi embarked on a swathe of reformist policies, and received much praise at home and abroad for his handling of the financial crisis, forcing banks to pay for their own bailouts, recovering assets stolen by senior bank executives, shoring up the Naira, keeping inflation under control, making much-needed credit available to agriculture, and for his outspoken criticism of rent-seeking and corruption. He was named central bank governor of the year in 2010 by The Banker magazine.
However, while Sanusi's reforms and outspokenness were winning him plaudits in some circles, they were also creating enemies for him amongst some of Nigeria's political and economic elites.
"Sanusi's suspension demonstrates that Nigeria is still, unfortunately, at the mercy powerful vested interests that will seek to do away with anyone perceived to be a threat," says political analyst Raymond Eyo. "He was suspended for speaking up against corruption and asking serious and pertinent questions that indirectly indict Jonathan of aiding and abetting the scourge."
Jonathan in fact tried to get the Central Bank governor to resign in December 2013, but Sanusi declined the offer. And since then, Sanusi has continued to cause a stir by alleging that billions of dollars from oil sales are unaccounted for. In these claims, he has drawn some criticism himself for the huge variation in the figures he has offered for the missing funds - lowering his initial $50 billion claim down to $20 billion - but accurate figures for NNPC are notoriously hard to come by - the company has not been fully audited since 2005.
Despite the president's claims of Sanusi's recklessness and mismanagement, many see his decision as a brazen political manoeuvre. Asked whether he believed his suspension was politically motivated, Sanusi replied: "It's not for me to comment. I think the answer to that is obvious." He remained upbeat and said that he was proud of what he had achieved, and hoped the economy would not be hurt by his suspension. However, in his parting shots, he reminded the Jonathan administration: "You can suspend an individual but you can't suspend the truth."
Markets responded to news of Sanusi's suspension with a great deal of uncertainty and many are unenthusiastic about the prospects going forwards.
"In the immediate term, Sanusi's removal will have a negative impact on the economy," says Gaimin Nonyane, Senior Macroeconomist at Ecobank. "Already, overnight, the naira has weakened 1.8%."
These views were echoed by Gadio. "Foreign investors are likely to sell Nigerian assets more actively in coming days subject to market liquidity constraints," he suggests, though points out that "the CBN intervened in the foreign exchange market by selling US dollars to banks, suggesting that the Central Bank wants to avoid a dislocation of the foreign exchange regime at this stage."
Gaimin and Gadio agree that the appointment of Alade as acting CBN governor is a step in the right direction, with Gaimin describing Alade as "safe pair of hands". Meanwhile, Ngozi Okonjo-Iweala, the Coordinating Minister of the Economy and Finance Minister, has tried to reassure investors by saying that Alade will continue Sanusi's policies. "Recent developments at the Central Bank of Nigeria will not change the economic policy focus of the country," she wrote in a press release. Interestingly, the tone and the content of Okonjo-Iweala's statement seem at odds with the much more aggressive tone that Jonathan's office has taken.
Bedding down for a fight
Sanusi's removal does not just raise questions about economic management, investor confidence and vested interest control of government, but also about Jonathan's executive overreach. According to Section 11 of the 2007 Central Bank of Nigeria Act, the president requires a two-thirds vote in the senate to remove the CBN governor. No mention has been made of this in government statements.
Were Jonathan to take his decision to the senate, it is highly unlikely it would be supported. Not only is Sanusi widely respected across the chamber, but the opposition All Progressive Congress (APC), which has more than a third of seats, is unequivocal in its demands that the vote be brought and that they oppose Sanusi's ouster.
It is therefore highly unlikely that Jonathan will put his decision before the senate, which is probably why Sanusi has been suspended rather than sacked. This means Sanusi will have to fight his corner through the courts. He has stated he will not retake office but will challenge Jonathan's decision for the sake of the CBN's autonomy from political control. Atiku Abubakar, a former vice-president who has recently joined the APC, backed Sanusi, urging him to take his case to court "in the interest of constitutionalism and the rule of law."
Regardless of claims made by the presidency of misconduct by Sanusi, the move must also be seen in the context of next year's long-awaited elections. 2013 was an annus horribilis for Goodluck Jonathan. Almost every move he took solidified opposition to him: first the opposition united, then his party split, and finally most of the dissenters in his party joined the opposition. Furthermore, with the 2015 elections fast approaching, Jonathan in recent months has been bedding down for a fight to the political death, sacking ministers thought to be loyal to opposition governors and putting in their place those who he hopes will battle tooth and nail for him in the lead up to elections.
Sanusi was a fly in this ointment. He was too independent, too outspoken and refused to speak from a pre-approved script. That is why he had to go. But Sanusi is not the main victim of Jonathan's pre-election politics. Nigeria itself is now poorer for having lost a bank governor whose successes will be taught in central banks across the globe. And the much promised radical development of Nigeria will be put on ice as elite interests and political power considerations colour every move in government from now until elections.
James Schneider is the Editor-in-Chief of Think Africa Press. He read Theology at the University of Oxford and has a particular interest in the study of political economy, capital flows, and equitable development. He is also a frequent commentator on African affairs for Monocle24 radio and other media. Email: email@example.com. Follow him on twitter @schneiderhome.
Lagun Akinloye, a British Nigerian, studied Sociology and Social Policy at the University of Leeds. He is particularly interested in the history and politics of West Africa, specifically Nigeria.In addition to his role at Think Africa Press, Lagun is an executive member of the Central Association of Nigerians in the the UK.Email: firstname.lastname@example.org. Follow him on twitter @L_Akinloye.