Trouble? Or a Sign of Change?
While the Economist may be freaking out about the departure of CBN Governor Sansui and the ramifications his departure will have on the Nigerian 2015 election cycle, I have a different take on it. With the suspension of a governor who clearly despised the administration he was working under, Jonathan has a much better chance of finding someone willing to work with both the President and Finance Minister to get to the bottom of this mess. Since the 20 billion was reported missing, Jonathan launched three investigations to discover the culprit, to no avail. But, if Sansui was such a crusader of anti-corruption, why was the money never found?
In addition, these fears should be mitigated by the fact that Ngozi Okonjo-Iweala, the Minister of Finance, is launching a probe from the Finance Ministry into the NNPC, a move that is both new and has the potential for real results as she herself is known for battling corruption.
Sansui may have started out as someone dedicated to wiping out corruption, but he allowed his own personal political desires to get in the way of a Nigerian recovery, and honestly, I would not be surprised to see his name on the Presidential ballot in 2015 as a way to try and stoke his ego further.
Don’t give up on Nigeria yet, just give the administration time to smooth out its internal issues, and watch and see when and where the money turns up.
Now for the fallout
The president’s decision to get rid of the central-bank governor is bad news
WHEN President Goodluck Jonathan suspended Lamido Sanusi, the governor of Nigeria’s central bank, on February 20th, he succeeded in removing an opponent. But over the past week it has become clear that this small victory has come at a steep price. Not only has Mr Jonathan signalled his unwillingness to tackle the rampant corruption that is eating away at his country—he has also scared foreign investors and presented an open goal to his political enemies.
The outspoken Mr Sanusi courted a stormy end to his tenure, due to finish in June, by accusing the state oil company, the Nigerian National Petroleum Corporation (NNPC), of failing to remit $20 billion in revenues to government accounts. The ministry of finance puts the figure at $10.8 billion. Mr Jonathan says he suspended Mr Sanusi because of “financial recklessness and misconduct” and “far-reaching irregularities” at the bank. But the decision came just days after Mr Sanusi presented detailed evidence to a Senate committee investigating alleged fraud and mismanagement at the NNPC. Most concluded that the suspension was politically motivated.
Investors are spooked, interpreting the decision as a sign of the authorities’ lack of stomach for fighting corruption. Already, $2 billion of the $9 billion in foreign cash invested in Nigerian bonds has moved out; bankers predict more will follow. The naira plunged to an all-time low of 169 to the dollar on February 20th. Sarah Alade, a highly regarded technocrat who will run the bank until June, has pledged to continue to support the currency. But the foreign-exchange reserves she needs to do so have fallen by almost 14% from 12 months ago.
The controversy has a strong political tinge. The Senate’s investigation was prompted by a leaked letter from Mr Sanusi to the president in which he accused the NNPC of violating the law. This put him in conflict with Diezani Alison-Madueke, the petroleum minister and a close ally of Mr Jonathan’s. The NNPC has repeatedly denied the allegations. Ngozi Okonjo-Iweala, Nigeria’s finance minister, says an independent audit must establish the truth. Many see her outspokenness as a sign she doubts that Mr Jonathan will hold a credible inquiry. “The key question we need answered is what is the correct amount,” she says. “We need urgent action to bring this to the fore.”
Mr Sanusi’s treatment undermines confidence that this will happen. It is not the first time there has been scrutiny of the NNPC, part of a rotten oil industry whose leakages undermine Nigeria’s macroeconomic stability. Eighteen months ago the former anti-corruption tsar, Nuhu Ribadu, claimed tens of billions of dollars in oil-and-gas revenue had been siphoned off in 2002-12. The president ordered three reports into it, but they never saw the light of day—if they exist at all—and no one was prosecuted. Months later the Nigerian Extractive Industries Transparency Initiative, part of a global lobby for transparency in natural-resource revenues, revealed a leakage of more than $9.8 billion in 1999-2008.
Mr Sanusi’s suspension has also provided ammunition for Mr Jonathan’s political opponents in the run-up to the elections in 2015. The All Progressives Congress, the main opposition party, described it as “the clearest indication yet that President Jonathan…is willing to silence any whistle-blower”. Although acclaimed abroad, Mr Sanusi has a mixed reputation at home. He tackled widespread financial fraud and overhauled Nigeria’s banks during a banking crash in 2009. He has stabilised inflation in single digits and cracked down on money-laundering. But his staff say he has dragged the bank into politics. His blunt outbursts criticising Nigeria’s governance propelled the legislature to propose a bill (which failed to pass) compromising the bank’s independence. Some accuse him of having political ambitions of his own.
The Senate is due to confirm Mr Jonathan’s new choice of governor, Godwin Emefiele, who heads Zenith, a private bank. He is expected to keep quiet and stick to tight monetary policy. “He is hardly seen nor heard—a typical attribute of the central banker the Nigerian establishment prefers,” says Oluseun Onigbinde, an economist at BudgIT, a start-up that publishes Nigerian economic data on social media.
Investors want the stability that came from Mr Sanusi’s policies and which Mr Emefiele supposedly seeks. But they are losing faith in Mr Jonathan’s administration. Thanks to its vast oil-and-gas reserves and the vitality of its 170m people, Nigeria remains hugely attractive. But Mr Sanusi’s tumultuous exit is another instance of the country’s squandered potential.