Nigeria’s new president has suspended the country’s central bank governor, 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 Emefiele, with “immediate effect”, according to a statement from the office of the government secretary on Friday night.
“This is sequel to the ongoing investigation of his office and the planned reforms in the financial sector of the economy.”
Emefiele was ordered to hand over leadership of the Central Bank of Nigeria to Folashodun Adebisi Shonubi, one of his deputies.
Tinubu had been critical of Emefiele in his inaugural address last month, saying interest rates had to be cut and that Nigeria’s multiple exchange rate systems should be unified.
“Monetary policy needs thorough housecleaning,” the president said.
The suspension, although long expected, marks a fall from grace for Emefiele, who had led the bank since 2014 and became the first central bank governor since Nigeria’s return to democracy in 1999 to be reappointed for a second five-year term. His final tenure was due to end next year.
Emefiele’s term as central bank governor was defined by unconventional policies with its independence questioned by critics who alleged it was too close to the government of former president Muhammadu Buhari.
He aligned the bank with Buhari’s interventionist approach, banning forex sales to importers of certain goods and doling out loans to farmers and industries in a bid to encourage local production. The bank also lent more than $50bn to Buhari’s government.
Emefiele’s tenure was dominated by the bank’s efforts to prop up the value of the naira with Nigeria’s dwindling foreign reserves to avoid sharp devaluations of the currency. There were also chronic dollar shortages that hampered an economy heavily reliant on imports.
Analysts challenged the wisdom of keeping the currency artificially high when the oil price crash of 2016 made the strategy untenable.
The introduction of multiple exchange rate “windows” and a scarcity of the greenback forced many businesses and citizens to turn to a parallel market where the dollar trades at as much as 50 per cent higher than the central bank’s rates.
Investors maintain that the multiple exchange rates are opaque and favour the well-connected who “round trip” — buying dollars for cheap from the bank and selling higher on the black market.
The value of the naira has fallen sharply in recent days, with the currency sliding to a record low on Thursday.
Emefiele also oversaw the introduction of redesigned banknotes ahead of February’s presidential elections. The rollout descended into chaos after shortages of the new currency led to queues at cash points and fights at banks.
The central bank chief stunned Nigerians last year when he attempted to run for president as a member of the ruling All Progressives Congress without resigning from his role, in contravention of electoral and central bank guidelines.
Emefiele sued the electoral commission and Nigeria’s attorney-general before giving up on his presidential ambitions.