Nigerian central bank Governor Godwin Emefiele on Friday was suspended by President Bola Tinubu a year before his term was set to end amid an investigation of his office and planned financial sector reforms.

Emefiele is to immediately hand over the affairs of his office to the deputy governor in charge of operations at the central bank Folashodun Shonubi, according to a statement issued by the office of the secretary to the government of the federation.

“This is sequel to the ongoing investigation of his office and the planned reforms in the financial sector of the economy,” it said. The deputy governor will act as governor of the central bank “pending the conclusion of the investigation and reforms.”

Shonubi, the acting governor, joined the central bank’s board in 2018 from the Nigeria Inter-Bank Settlement System Plc, where he was managing director, according to his profile published on the central bank website. He has over three decades experience in banking and once served as treasury head at Citibank’s Nigeria unit from 1990 to 1993.

The central bank did not immediately respond to request for comment. Emefiele is the second central bank governor to be suspended from his position before the end of his tenure, raising questions over the independence of the Abuja-based bank. His predecessor, Sanusi Lamido Sanusi, was similarly suspended four months before the end of his tenure by former president Goodluck Jonathan over allegations of “financial recklessness and misconduct.”

Emefiele, a former chief executive of Zenith Bank Plc, took up his post at the Central Bank of Nigeria in June 2014, a year before President Muhammadu Buhari came to power. He was reappointed for a second five-year term in May 2019 that was due to end in June 2024.

The governor was one of the most influential members of Buhari’s government during which the central bank made significant interventions in the economy, including propping up the naira, lending unprecedented sums to the government and extending credit to multiple sectors.

‘Unorthodox Tenure’

Critics slammed the central bank governor for undue attention to development finance and excessive regulation of banks at the expense of price stability. The lion’s share of a 1 trillion-naira ($2.1-billion) loan it extended to rice farmers, under so-called Anchor Borrowing Programme, was not repaid.

He also came under fire for subjecting banks to contradictory regulation.

For instance, whereas lenders must hold 32.5% of deposits as reserves — far more than their counterparts in South Africa and Kenya, as the regulator battles to contain inflation — banks are being forced to extend 65% of their deposits as loans to stimulate credit.

The central bank governor also left interest rates unchanged, well below the annual inflation rate for too long, critics contend. When the bank began to tighten last May it was unable to rein in consumer prices until they skyrocketed to an 18-year high of 22% in April.

Emefiele even made a highly visible, if short-lived, foray into party politics in May last year when he asked a federal court to permit him to remain in charge of the CBN while seeking the ruling party’s nomination in presidential elections held in February this year. He dropped those ambitions after former president Buhari ordered ministers and political appointees wishing to run for office to resign.

His most most controversial move as central bank governor came just before Nigerian presidential elections, with his demonetization policy.

His attempt to replace old naira notes with new ones unexpectedly resulted in shortages, hobbling day-to-day business in the cash-dominant economy.

Politicians, including President Tinubu, accused him of fostering the unpopular policy to damage his candidacy. Some state governors challenged the policy in court and in a ruling, the Supreme Court nullified the Feb. 10 deadline set by the governor to phase out the old notes. It extended the deadline to year-end.

(Updates with profile of new central bank governor in fourth paragraph and brief background on the suspension of former governor)

Author: William Clowes, Emele Onu and Ruth Olurounbi