Sanusi’s bombshell “suspension”

By John Campbell

Nigerian president, Goodluck Jonathan on Thursday ordered the immediate suspension of Lamido Sanusi, the governor of Nigeria’s Central Bank. According to the BBC, Reuters, and the Financial Times, trading in Nigeria’s foreign exchange, bond, and money markets, halted due to uncertainty over the president’s move. How long trading will be halted and what the consequences will be remains to be seen.

Various reactions from international economists indicates that the initial drop in the Naira after the announcement is an expected reaction after a surprise move like Jonathan’s in an emerging market, especially when international investors have such a high respect for Sanusi. Other commentators remark that the timing of the suspension points to political motivations for the suspension rather than economic.

Sanusi is widely respected by the international financial community for his technical expertise and for his reform of the Nigerian banking system. Along with Finance Minister Ngozi Okonjo-Iweala he was the “face” of Nigerian fiscal and financial reform. The Banker, a publication of the Financial Times, designated him “Central Bank Governor of the Year” and “Central Bank Governor of the Year for Africa.” In 2011, Time included him on the list of the 100 of the world’s most influential people. Over the past few months, Sanusi has claimed that some U.S. $20 billion in revenue owed to the state from the state-owned oil industry has, in effect, disappeared through corruption. Those charges – which many observers find credible – raised the ire of President Jonathan, who is likely to run for re-election as president in early 2015. Just before Christmas 2013, Jonathan demanded that Sanusi resign; he refused. There is media speculation that Sanusi has other revelations to make about the pervasiveness of corruption.

It is as yet unclear what Sanusi’s “suspension” means. The Central Bank is supposed to be independent of the government; the governor may be removed only by the National Assembly, not the president, and only with cause. The presidential statement announcing the suspension refers to on-going investigations into “breaches of enabling laws, due process, and mandate of the Central Bank.” Sanusi says he will fight the “suspension” to preserve the Central Bank’s independence. At the very least, his “suspension” raises questions about how real the independence of the Central Bank will be. Jonathan has appointed Sarah Alade, currently deputy governor of the Central Bank for economic policy as acting governor. He also announced that Godwin Emefiele, currently managing director of Zenith Bank of Nigeria, will take over as governor in June.

Sanusi was appointed governor by President Jonathan’s predecessor, Umaru Yar’Adua, and his term is up in June, 2014. He is part of the core northern Nigerian establishment, at least some of which is alienated from Jonathan’s predominately southern and Christian administration. His father was the permanent secretary at the Ministry of Foreign Affairs (the highest non-political position) and his grandfather was the emir of Kano. He is also a distinguished Islamic scholar.

John Campbell is a former US ambassador to Nigeria