Explainer: What a new central bank chief means for Nigeria

Controversy was the hallmark of Godwin Emefiele’s nine-year tenure as governor of Nigeria’s central bank. According to Bloomberg, his attempts to manage the nation’s currency, the naira, gave rise to a web of varying exchange rates and drove many businesses and people to the black market.

He also approved billions of dollars of loans to the government, helping push public debt to a record. Then Bola Tinubu took over from Muhammadu Buhari as president in late May after winning a hotly contested election. Less than two weeks later, Emefiele was suspended and taken into custody. His dramatic departure paves the way for a major shakeup of Nigeria’s monetary and exchange rate policies.

1. What happened to Nigeria’s central banker?

Tinubu announced Emefiele’s removal as governor of the Central Bank of Nigeria in a curt statement issued after the markets closed on June 9. Hours later the nation’s secret police detained him for “investigative reasons.” Folashodun Shonubi, one of Emefiele’s deputies, was appointed governor on an acting basis.

2. What’s he accused of?

Neither Tinubu’s office nor the State Security Service have publicly specified what Emefiele is alleged to have done, and he hasn’t been officially charged. But in December 2022, the SSS filed a court affidavit stating that it had found “credible intelligence of suspicious activities” by Emefiele, including money laundering, terror financing and the abuse of multibillion-dollar lending programs.

Ahead of the presidential elections in February, Tinubu and his allies in the ruling All Progressives Congress accused the governor of trying to undermine their party’s support by pursuing an unpopular policy of replacing high-denomination naira notes, which resulted in a shortage of bills that hobbled business in the cash-dominated economy.

3. What impact has Emefiele’s removal had on markets?

Nigeria’s dollar-denominated debt surged after Emefiele was ousted and a senior adviser to Tinubu said that unification of exchange rates was “imminent,” signaling a move away from unorthodoxy. The naira, meanwhile, slumped to a record low against the dollar in anticipation of the official exchange rate being adjusted to closer to the black market rate. As of mid-June, the greenback trades on the informal market at about a 60% premium to the official rate.

4. How do the changes fit with Tinubu’s economic agenda?

Tinubu has pledged to revive Africa’s largest economy and is targeting a growth rate of at least 6% a year by boosting manufacturing, courting foreign capital and boosting oil production. Exchange-rate reform will be key to achieving that aim. In his May 29 inauguration speech, Tinubu singled out the central bank for criticism, saying multiple exchange rates privilege “arbitrage” over “meaningful investment.” Investors are waiting to see how the changing of the guard will affect interest rates or whether the central bank’s 6% to 9% inflation target will be adjusted.