The recent power struggle within Nigeria's economy continues as the country's suspended central bank governor, Godwin Emefiele, was taken into custody by the secret police after being removed from his position by President Bola Tinubu. The president's brief statement did not offer much detail about the dismissal, citing "ongoing investigations" as the reason. However, it is well known that there has been tension between Emefiele and Tinubu since campaigning began for the presidential election that Tinubu won in February.
Nigeria's multiple-currency regime and high-interest rates have been at the center of criticism, with Tinubu calling for an end to the regime and a reduction in interest rates to boost economic growth. As a result, Nigeria's currency has weakened by 2.4% this year and touched an all-time low on Friday, with a wide spread between the managed and parallel markets.
Emefiele had been an influential figure in Nigeria's economy under Tinubu's predecessor, Muhammadu Buhari. The central bank intervened heavily in the economy, lending unprecedented sums to the government and extending credit to multiple sectors. Emefiele played a central role in promoting Buhari's agenda, including propping up the naira and banning access to foreign exchange for imports of goods to boost domestic production.
Critics claimed that Emefiele paid undue attention to development finance and regulation of banks at the expense of price stability. Moreover, the demonetization program he introduced before the presidential election in February, which aimed to replace high-denomination naira notes with new ones, resulted in a shortage of bills that disrupted the cash-dominant economy's day-to-day business.
Deputy Governor Folashodun Shonubi will replace Emefiele in an acting capacity. Shonubi's extensive experience in banking, including being the managing director of the Nigeria Inter-Bank Settlement System Plc and the head of treasury at Citigroup Inc.'s Nigerian unit, makes him a prime candidate to take over the central bank's operations.
The power struggle in Nigeria's economy continues as the country seeks to overcome challenges such as instability in currency exchange rates and high-interest rates. Although it remains unclear what the outcome of the investigations into Emefiele will be, the appointment of a new governor may provide an opportunity to steer the country's economy in a new direction.