Nigerian central bank governor Lamido Sanusi begins a legal challenge against his suspension in the Federal High Court in Lagos on March 21, 2014. At stake is much more than the future of Mr Sanusi, who was planning to step down from the post in June anyway but was suspended from his post by Nigeria’s president, Goodluck Jonathan, in the final week of February. If Mr Sanusi is not reinstated, it will cast a shadow over the independence of Nigerian institutions such as the central bank, and the ability of technocrats such as Mr Sanusi to do their jobs. It will also throw doubt on the investment case for international funds to go to Nigeria.
A presidential spokesman said Mr Sansusi has been suspended for “various acts of financial recklessness and misconduct”. But analysts saw his removal as politically motivated following on from Mr Sansusi’s questioning of why Nigeria’s oil revenues have been declining at a time when oil prices are buoyant. His suspension came just days after he submitted detailed evidence to a senate committee investigating alleged fraud and mismanagement at the Nigerian National Petroleum Corporation (NNPC).
Investors have interpreted the move as a lack of commitment by the government to essential reforms and have pulled out $2bn of the $9bn of overseas money invested in sovereign bonds. This is because Mr Sanusi, together with the finance minister Ngozi Okonjo-Iweala (see her interview in The Banker’s March issue), are regarded as two very credible technocrats who take the correct and tough economic decisions in spite of political pressures to do otherwise.
In recognition of Mr Sanusi’s achievements – in cleaning up Nigeria’s banks and enforcing monetary stability – The Banker made him our central bank governor of the year for 2011. At this point in time we have no reason to doubt that our decision was the right one and we are much more worried about Nigeria’s reputation than Mr Sanusi’s.
We do, however, agree with Ms Okonjo-Iweala that going public on some of his concerns may have been foolhardy. The challenge for a reformer is to push hard enough to get change but not so hard as to get removed. In this sense, Mr Sanusi has fallen down.
Mr Sanusi was always playing a high-stakes game and prepared to go for the jugular. He said in an interview with The Banker early last year: “The job is extremely demanding. I don’t think it’s something that I would like to do for 10 years. I also think I have certain skills and a temperament that are suitable for a certain phase. I’m a crisis central bank governor. I came at a time of crisis.”
As it turns out, Mr Sanusi is also leaving at a time of crisis, although not by his own volition. There is a view that he has political ambitions and current events may be a prelude to his playing a role in the 2015 elections. Some observers have also concluded that Mr Goodluck’s tough action signals his intention to seek a second term, even though by convention the leadership of the ruling People’s Democratic Party should now be given to a Muslim candidate.
Whatever the political intentions, the onus is now on the government to make sure it does a proper audit on NNPC’s accounts as instigated by Ms Okonjo-Iweala. Otherwise, Nigeria’s credibility in the markets will be severely set back.
Brian Caplen is the editor of The Banker.
