Nigeria’s new president suspends central bank governor

Nigeria’s new president has suspended the governor of the country’s central bank, marking the end of an era of unorthodox policies at the West African institution.

Bola Tinubu, who took office on May 29, removed central bank chief Godwin Emefile with “immediate effect,” according to a statement from the government secretary’s office on Friday night.

“This is a sequel to his office’s ongoing investigation and planned reforms to the financial sector of the economy.”

Emefiele was ordered to hand over the leadership of the Central Bank of Nigeria to one of his representatives, Folashodun Adebisi Shonubi.

Tinubu criticized Emefile in his inaugural speech last month, saying interest rates should be cut and Nigeria’s multiple exchange rate systems unified.

“The monetary policy needs a thorough cleaning,” the President said.

The suspension, though long expected, marks a fall from grace for Emefele, who had led the bank since 2014 and was the first to be reappointed for a second five-year term since Nigeria’s return to democracy in 1999. Became the central bank governor. His last term was to end next year.

Emefile’s tenure as governor of the central bank was defined by unorthodox policies, with its independence being questioned by critics, who alleged that it was too close to the government of former President Muhammadu Buhari.

He aligned the bank with Buhari’s interventionist approach, banning the sale of foreign currency to importers of certain goods and extending loans to farmers and industries to encourage local production. The bank also loaned over $50 billion to Buhari’s government.

Emefile’s tenure was dominated by the bank’s efforts to raise the value of the naira alongside Nigeria’s dwindling foreign reserves to avoid a sharp devaluation of the currency. There was also a chronic dollar shortage that hampered an economy heavily dependent on imports.

Analysts challenged the wisdom of keeping the currency artificially high when the 2016 oil price collapse made the strategy untenable.

The introduction of multiple exchange rate “windows” and a shortage of the greenback forced many businesses and citizens to turn to a parallel market where the dollar trades at 50 percent above central bank rates.

Investors maintain that many exchange rates are opaque and favor well-connected people who “round trip” – buying dollars cheaply from the bank and selling high on the black market.

The value of the naira has dropped sharply in recent days, with the currency sliding to a record low on Thursday.

Emefiele also oversaw the introduction of redesigned banknotes ahead of the February presidential elections. The rollout descended into chaos due to a shortage of the new currency, which led to queues at cash points and brawls at banks.

The head of the central bank stunned Nigerians last year when he attempted to run for the presidency as a member of the ruling All Progressives Congress without resigning from his role in breach of electoral and central bank guidelines.

Emefiele sued the Electoral Commission and the Attorney-General of Nigeria before giving up on his presidential ambitions.