On Friday evening, Tinubu issued an immediate suspension order for Emefiele, removing him from his position as the governor of the Central Bank of Nigeria (CBN). Emefiele has been instructed to hand over his duties to Folashodun Shonubi, the deputy governor in charge of operations.
In Nigeria, when a CBN governor is suspended, it is generally considered difficult for them to return to their position. Emefiele himself assumed office in 2014 following the suspension of the then CBN Governor Sanusi Lamido by President Goodluck Jonathan. His reappointment in 2019 made him the first CBN governor in over two decades to secure two terms.
The suspension of Emefiele, who has been referred to as the “emperor” by some bankers due to his authoritative handling of the country’s monetary affairs, is seen as President Tinubu’s latest move to rectify monetary policy.
During Emefiele’s tenure, Nigeria adopted a multiple exchange rate system that created confusion among foreign investors and led to a scarcity of dollars in the country. This practice drew criticism from Tinubu, who called for its discontinuation in his inauguration speech.
Addressing the broken foreign exchange market in Nigeria is considered a crucial step in attracting foreign investment to the largest economy in Africa. For many investors, Emefiele’s removal as CBN governor is seen as essential in achieving this goal.
In addition to his failed bid for the presidency, which would have positioned him against Tinubu in the battle for representing the ruling APC party, Emefiele’s actions did little to gain favour with Tinubu. During his campaign, Tinubu accused Emefiele of trying to undermine his chances of winning the elections by implementing a naira redesign policy that resulted in a cash shortage and generated anger toward the ruling party.
On the contrary, Emefiele had a positive relationship with Tinubu’s predecessor, President Muhammadu Buhari. Buhari supported Emefiele’s unconventional monetary policies and instructed him to resist calls for a weakening of the naira after a decline in oil prices affected oil-dependent currencies.
Emefiele’s tenure, which began in 2014 under former President Goodluck Jonathan, has been marked by a significant increase in inflation and a decline in the value of the local currency. According to data from the National Bureau of Statistics (NBS), Nigeria’s headline inflation rose from 8 percent when Emefiele assumed office to as high as 22 percent in April 2023.
During his time as governor, the CBN violated its own regulations by lending more money to the government than permitted, exacerbating the inflationary pressures Emefiele was attempting to control. The CBN’s loans to the government, known as “Ways and Means,” surged from N790 billion in May 2015 to N23.7 trillion in 2022. Between 2021 and 2022 alone, these loans increased from N17.5 trillion to N22 trillion, exceeding the acceptable limit of five percent of public revenue set by the CBN Act.
Emefiele implemented curious policies such as restricting importers of 42 items from accessing dollars through the official market, which revealed his unconventional ideas about monetary policy. Rather than focusing on improving dollar supply, he sought to suppress the demand for dollars.
Even when Emefiele’s policies proved ineffective, he faced no accountability. The bankers refrained from criticizing or questioning him, even when he routinely penalized them for violating a manipulated lending guideline that required them to lend 60 percent of customer deposits.
The banks also faced one of the highest Cash Reserve Ratios in the world, effectively around 40 percent. Despite being unable to utilize 40 percent of total customer deposits for business purposes, the bankers