Teaching Comparative Government and Politics

Tuesday, March 04, 2014

Bank on the hot seat

Will Nigeria's President Jonathan further mobilize the political opposition or is this the last straw on his government's back?

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… he succeeded in removing an opponent…. 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.

Lamido Sanusi

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… 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…

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…

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…

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”…

Investors want the stability that came from Mr Sanusi’s policies and which [his successor] 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.