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Nigeria’s central bank governor has been arrested and suspended from his position, following a presidential election that was marred by unrest and cash shortages attributed to central bank policies.
This month, only two weeks after newly elected president Bola Tinubu took office, Nigeria’s central bank governor Godwin Emefiele was arrested by the country’s secret police, the State Security Service (SSS).
A video shot by the SSS and distributed via the Department of State Services (DSS) shows Emefiele being transferred from a pickup truck to a private plane after being handcuffed.
In a statement, the Federal Ministry of Information and Culture (FMIC) said Emefiele was also suspended with “immediate effect” one day prior to being taken into custody.
In his place, Emefiele was ordered to hand over the affairs of the Central Bank of Nigeria (CBN) to deputy governor Adebisi Sonubi.
Tinubu, who represents the country’s All Progressives Congress (APC) party, took over from former president Muhammadu Buhari, also of the APC, who was term-limited after already serving two terms in office.
The specific charges against Emefiele are still unclear, but they appear to relate at least in part to his handling of the Naira redesign, a CBN policy to replace “old series” paper banknotes with polymer notes.
As the FMIC said of Emefiele’s arrest: “This is the sequel to the ongoing investigation of his office and the planned reforms in the financial sector of the economy.”
But this month’s arrest is not the first time that Nigeria’s secret police have attempted to move in on Emefiele.
The warrant that never was
In December last year, according to Nigeria’s Premium Times, the SSS applied for a warrant to arrest Emefiele on suspicion of “financing terrorism, fraudulent activities and economic crimes of national security dimension.”
That application was rejected by the Federal High Court, however, on the grounds that the SSS had not provided sufficient evidence to justify an arrest.
At the time former president Buhari was still in office and the Naira redesign had been ongoing for little more than a month.
As covered by VIXIO, the CBN had initially set the deadline to exchange old series Naira notes as no later than January 31, 2023, after which only the new notes would be recognised as legal tender.
However, as the deadline approached, opposition to the policy grew stronger; both consumers and merchants complained of cash shortages and bank branches and ATMs became the target of attacks.
In Abeokuta, capital city of Ogun State, “virtually all” of the state’s bank branches were forced to close due to attacks and widespread unrest, and one person was shot by police.
The House of Representatives then stepped in, petitioning the CBN to extend the deadline of the cash swap by another six months and warning that Nigeria’s largely cash-based economy would face “harsh consequences” if the CBN did not reverse course.
When the CBN declined, the House of Representatives took the issue to the Supreme Court, which adjourned the case and pushed the deadline out until after the presidential election.
During that time, Kaduna State governor Nasir Ahmad El-Rufai said on Twitter that the CBN had withdrawn more than N2trn ($4.3bn) old notes from circulation, but had printed only N400bn ($9.3m) new notes to replace them.
“In effect, currency confiscation was unilaterally and unlawfully implemented by the CBN,” he said.
“Trade and exchange have collapsed. Human suffering, impoverishment and economic contraction resulted.”
Finally, on March 3, one week after Tinubu was pronounced winner of the presidential election, the Supreme Court issued its final decision, pushing the cash swap deadline out until December 31, 2023.
‘Public enemy number-one’
As Nigerians digested the arrest of the CBN longest-serving governor, the country’s ruling party welcomed Emefiele’s suspension and his potential removal from office.
In the run-up to the election, both Tinubu and El-Rufai had accused Emefiele of attempting to sabotage the election, due to his choice of deadline for the cash swap policy and by deliberating restricting the supply of new banknotes.
Both Tinubu and El-Rufai are representatives of the APC, and both accused Emefiele of attempting to engineer Tinubu’s defeat at the polls.
Adding another layer of intrigue to the situation is the fact that, last year, Emefiele attempted to launch a presidential campaign of his own under the APC banner, only to be told by the Federal High Court that he could not do so without resigning as CBN governor.
It is claimed that the unrest caused by the Naira redesign did significant damage to the Bhuari presidency and, on top of that, widespread cash shortages almost led to the election being called off.
Femi Akande, State House correspondent at Nigeria’s TVC news, told viewers earlier this month that the Independent National Electoral Commission (INEC) had been “pleading” with the CBN for access to cash to run the election.
According to Akande, “most” of the INEC’s ad hoc staff do not have bank accounts, and the INEC would have been unable to pay them without a last-minute cash injection from the CBN.
Ultimately Tinubu won the election but the APC suffered in terms of vote share, with its majority slashed from 55 percent to 35 percent of the popular vote.
Emefiele’s downfall at the hands of the APC is ironic, given that it was former APC president Buhari who, in 2019, nominated Emefiele to serve a second term as central bank governor.
