Despite various countries making great strides forward in responsible fiscal management, recent events have reignited concerns about the integrity and independence of central banks in Africa. Specifically, in the past few months, one central bank governor has been suspended, another has been threatened with arrest, and a third has abruptly resigned.
Nigeria. Perhaps the most high-profile of these incidents has been the suspension of Lamido Sanusi by President Goodluck Jonathan. Widely respected for his anti-corruption reform and rescue of the country’s banking sector in 2009, Sanusi recently had begun to turn his sights on the oil and gas industry. Beginning in September of last year, in a letter to President Jonathan, he alleged that the Nigerian National Petroleum Corporation (“NNPC”) had failed to remit billions of dollars in oil revenues to government accounts. A few days after Sanusi submitted evidence to the Senate Committee tasked with investigating the matter, President Jonathan suspended Sanusi for alleged “financial recklessness and misconduct.”
Unsurprisingly, the suspension — both its timing and its similarity to actions taken against other whistleblowers — led many observers to believe that the action was politically motivated punishment, a refusal to tackle corruption, or both. However, after weeks of pressure from Minister of Finance Dr. Ngozi Okonjo-Iweala, the Senate Committee, and the public, President Jonathan has since authorized a forensic audit of the NNPC. Meanwhile, although Sanusi already had plans to step down in June, he is still challenging in court the legality of the suspension and the government’s investigative authority over him and the central bank. Earlier this week, a Nigerian court awarded Sanusi $300,000 in damages in a separate harassment action brought against the government.
Kenya. In contrast, the corruption charges against Njuguna Ndung’u have been one-sided. The Kenyan Ethics and Anti-Corruption Commission and Director of Public Prosecutions are seeking the arrest and prosecution of Ndung’u and a number of other senior central bank officials on grounds of abuse of office and violation of procurement regulations which led to a multi-million dollar loss of public funds. For now, there is a court order barring the authorities from carrying out the arrest pending the determination of the application filed by Ndung’u opposing the charges. If the courts allow the abuse of office charge to stand, then Ndung’u may be forced to resign as a matter of law. Ndung’u is one in a long line of past governors who became embroiled in controversy while in office.
Somalia. After being in office for less than two months, Yussur Abrar unexpectedly resigned alleging pressure to engage in activities she believed would “open the door to corruption.” Prior to Abrar taking office, the institution as a whole was called into question by a United Nations investigative report which characterized the bank as a slush fund corruptly and woefully mismanaged by the Somalian government. Somalia’s government has vehemently contested these allegations.
The fact that these events involve corruption and/or political interference is concerning given the importance of central banks being free from all inappropriate influences. Furthermore, these kinds of actions could significantly hamper these countries’ development ambitions. Today the largest economy on the continent, Nigeria saw “a slide in the naira, a sharp drop in the stock market and a temporary halt to bond trading” after Sanusi’s suspension was announced and over 20% of foreign cash invested in Nigerian bonds has since moved out (with predictions of more to follow). Kenya needs strong leadership at the helm as it continues in the process of issuing its first Eurobond (worth up to $2 billion). Finally, the current Somali government depends heavily on money from Western donors who see the country as a strategic battleground in the fight against regional al Qaeda groups.