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"You Can't Suspend the Truth": Worries for Nigeria over Sanusi's Ouster

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.
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Suspended Central Bank Governor Lamido Sanusi speaking at the World Economic Forum. Photograph by Urs Jaudas/WEF.

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 mayhem

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.

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"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."This paragraph like the rest of the article is problematic. It is decidely partisan and should pass for an oped not features. It is riddled with the usual beer parlour gossip about trhe way the Nigerian goverrnment operates. You have essentially extolled Sanusi's virtues without addressing some of the grave charges against him. You have chronicled view of experts outside Nigeria, why did you not take the trouble to find out what bankers and finance experts in Nigeria think? This is a poor job. I am not impressed. Sad that Mr. Akinloye who I respect his insights has failed to be thorough this time.

Aliu, you are missing the critical analysis of this article. The de factor or autonomous separation of power and independence of the central bank is at the heart and center of this political miscalculation by President GJ. And it is very sad and unfortunate that the independence of the Central Bank is now completely in jeopardy until the Nigeria court resuscitate it from the brink of sinking into an authoritarian owellian gulag of no return. Separation of power is very necessary for a nascent democratic nation like ours. I have been reading with dismay the myopic or jaundice interpretation of the actions of the President-GJ by those with the so- called superior knowledge albeit foolishness. Very sad, tribal sentiments, counter-posed hypothetical argument based completely on unsubstantiality against the SLM for daring to speak up. In 2008, I wrote a book linked herein http://tinyurl.com/lmva58b. Because the crux to this generalized discourse is that whenever “ anyone” disrupt any existing ingrained cultural system, dissonance occurs, a comfort zone is disturbed, that person should be ready to meet the tsunami of powers to be. Particularly in developing nation, there is no recourse, you could even die.

The President pretty much took laws into its own hand, and it is amazing how Nigerian politicians take actions for their own personal gains, forgeting that every action has repercussions for the people they are supposed to be serving.  This action by President Jonathan was done as a power play to show who is the boss, forgeting that his action would reverberate through the capital market, the economy, and perceptions by foreign investors which ends up trickling down to the larger economy and affects the common man.It is a well known fact, that President Jonathan is not too bright and incompetent, but I amazed that the finance minister who should know better signed off on this outster of the governor. What was Mrs. Okonjo-Iweala thinking, Sanusi has 4 months left on his tenure, what was the rush, and with this one really 'dumb' move by Mr. President, the CBN independence is lost forever.  From now on, any President that dont agree with the CBN governor can fire them, and viola, we are back to the awful Abacha days again.  For those who thought that the Nigerian court will come to the rescue, I am not holding my breath on that.This coming from a President that was backed by an overwhelming majority of Nigerians after the death of President Yar'adua and all of the intrigues of the ex-President inner circles.  Power as they say corrupts absolutely, in a little over 3 years, the President has basically squander all of the goodwill of the people.