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Nigeria’s suspended central bank governor Godwin Emefiele will appear before a Lagos court on Tuesday for a bail hearing, weeks after heavily armed members of the secret service beat up prison officials outside the courtroom and bundled him into custody.
Emefiele, once one of Nigeria’s most powerful men, is charged with illegally owning a shotgun, an accusation he denies. He also faces an official probe into his nine years in charge at the bank, which ended with his suspension by new president Bola Tinubu.
Emefiele’s fall from grace began late last year when it emerged that the man running the monetary policy of Africa’s biggest economy was being investigated by the secret service for alleged economic crimes.
The pressure ratcheted up further ahead of February’s presidential vote when he rushed through a controversial banknote replacement scheme. Many saw this as a ruse to flush out the war chest of the deep-pocketed Tinubu during an election process in which cash was king.
A senior official from the ruling All Progressives Congress party told the Financial Times after the election that Emefiele “should leave the country before Tinubu takes office”.
Tinubu then used his inauguration speech to proclaim that the bank needed a “thorough house cleaning”, which set in train a wholesale change in monetary policy welcome by most foreign investors. Emefiele was suspended days later and then arrested.
No one expects the 62-year-old to return to the bank to complete his remaining year in charge and an interim governor has been appointed. Emefiele has spent much of the past few months in detention and appeared at the court in Lagos last month clutching a red Bible, before being seized by the secret services as he left the courthouse.
If Emefiele has run foul of the new president on a personal level, there has also been severe criticism of his stewardship of the bank.
“Emefiele’s greatest legacy as central bank governor is neither his ill-fated decade-long attempt to prop up the value of the naira nor the abrupt currency redesign initiative that likely spelt his end,” said Michael Famoroti, head of intelligence at the Lagos-based Stears data company.
“His tenure will be a seminal reminder of the non-negotiable importance of central bank independence and the need for a narrow, well-defined central bank mandate.”
Two policies have stood out for criticism. One was the multiple windows Emefiele introduced for converting scarce dollars into naira at the official — artificially low — exchange rate. The resulting dollar scarcity has been a disincentive to foreign investors who have been reluctant to put money into Nigeria without confidence they can get it out.
This also gave Emefiele huge power over economic policy, effectively making his institution the arbiter of industrial policy. In a mostly failed effort to encourage local production, the bank prohibited importers of a widening array of items, from roofing sheets to rice and from cement to toothpicks, from accessing dollars.
Manufacturers and importers alike were pushed to the black market, where the currency traded at up to 50 per cent above the official rate. Many complained the opaque regime allowed the well-connected to make easy money by accessing cheap dollars at the official rate and selling them on the black market.
Secondly, the bank failed to publish accounts for almost the entirety of Emefiele’s leadership. When it did make its financial statements public last week for the first time since 2015, it was shown to have broken legal limits on how much it was allowed to lend to the government through so-called Ways and Means advances.
Such advances — effectively printing money to fund government deficits — were meant to be capped at 5 per cent of the previous year’s government revenues. By the end of 2022, by the bank’s own admission, its overdraft to the government had grown to N23.18tr ($50.2bn), massively over the limit.
“He was unable to rein the government in,” said one former central bank executive who spoke on condition of anonymity. “He only needed to hold the line and say: ‘My hands are tired by the law’.”
If Emefiele was protected by former president Muhammadu Buhari, the official said, he also became a symbol of the president’s failed economic policies when debt spiralled and economic growth stalled.
Yet such was Emefiele’s power that, as Buhari’s tenure drew to a close, the governor’s name frequently came up as a possible ruling party presidential candidate.
Emefiele played down rumours, although fleets of cars began to appear in the capital Abuja with his face and accompanying election slogans.
A nascent presidential run was soon struck down by the courts, which upheld a decision to disallow his candidacy on the grounds that a sitting central bank governor could not run. In retrospect, for Emefiele, the writing may have already been on the wall.
