By the Blouin News Business staff

Nigeria’s central bank chief ousted

by in Africa.

IMF Managing Director Christine Lagarde (C) sits between suspended Nigerian Central Bank Governor Sanusi Lamido Sanusi (L) and Finance Minister Ngozi Okonjo-Iweala during a joint press conference December 20, 2011 in Lagos, Nigeria.

IMF Christine Lagarde (C) between suspended central bank chief Sanusi Lamido Sanusi (L) and Finance Minister Ngozi Okonjo-Iweala during a joint press conference December 20, 2011 in Lagos, Nigeria. AFP/Getty Images

Over a month ago we asked the question whether Nigeria’s central bank chief Lamido Sanusi would resign. The answer has been delivered: President Goodluck Jonathan, using his executive powers, has suspended the Central Bank Governor, whom he sees as the culprit behind the alleged fraud at the state-owned oil company.

The official statement affirmed the reason of his ousting was due to “various acts of financial recklessness and misconduct which are inconsistent with the administration’s vision of a Central Bank propelled by the core values of focused economic management, prudence, transparency and financial discipline”. In an interview with Sahara Reporters, Sanusi defended his tenure at the central bank (he is well-regarded in international circles due to his push for banking reform in Nigeria in the first years of his mandate). “The year before I became governor in 2008 the central bank contributed 8 billion naira to the federal budget. By 2012 I contributed 80 billion. For 2013 I’m contributing 159 billion, 20 times what was being contributed before I became governor,” he stated.

While the story is still unfolding, these words could hurt the Goodluck government (especially since the missing funds haven’t been accounted for yet and Sanusi, an outspoken critic of the government, is still raising concern). Many argue that politics have played a big role in the central bank’s chief suspension. If true, Lamido Sanusi’s allegations could expose high-level fraud in Nigeria’s opaque and corrupt oil sector. That could bleed into the governmental arena where under-the-table deals are all in a day’s work. With the robust Islamist insurgency Boko Haram group gaining presence and establishing itself as a regional power, the consequences could be widespread. (Red Zone: Nigeria).

President Jonathan named Godwin Emefiele — the managing director of Zenith Bank, the second-largest company in the country — as the next central bank governor, according to Reuters. But Emefiele won’t fill the slot until Sanusi’s term officially expires in June. The central bank’s Deputy Governor Sarah Alade has been named interim governor. Emefiele’s nomination had been sent to the Senate for approval. The independence of the institution is now under attack — and the task for the new governor has only become more difficult.

The effects on the economy were visible the same day. “Currency, bond and money markets stopped trading because of the uncertainty created by the suspension. Trading in the naira currency resumed after the central bank intervened with dollar sales, by which time debt markets were closed,” Reuters reported. More pain might be on its way.