A CBN governor should not be a talkative

 Mixed reactions yesterday trailed the suspension of Mallam Sanusi Lamido Sanusi as CBN Governor from office.
In his reaction former Vice President Atiku Abubakar asked the suspended Governor to approach the Court to seek redress and challenge his suspension in the interest of constitutionalism and the rule of law, just as he said that President Goodluck Jonathan has no such powers to suspend the CBN governor from office.

FBN Capital

FBN capital in its note to local and international investors said “this morning’s suspension of the CBN governor, Lamido Sanusi, on the instructions of the President can be traced to a series of heated exchanges on flows into the federation account.

Indeed in early January the local newswires reported that the president had asked the governor to resign after the leaking of a letter in which Sanusi is said to have itemised discrepancies in the finances of the state oil corporation.

What next? We will assume that the suspension does not prove the trigger which derails the pursuit of a central element of the CBN’s core mandate, the attainment of exchange-rate stability.
“Sarah Alade, senior deputy governor with a solid track record in monetary policy, has been appointed acting governor. She has already restated the CBN’s commitment to its core mandate. The MPC takes its decisions on a majority vote. Sanusi was highly persuasive as chair of the committee but his views echoed those of senior policymakers.

“Their policy aims are a managed exchange rate and strong currency. We are not aware of any support within officialdom for a float, or even a rate to reflect said fair value or inflation differentials. There are two vacancies to be filled within the MPC, one internal and the other external.

“The pressure on the exchange rate before this morning’s development stemmed from oil production losses and the fear that the offshore portfolio community would exit Nigeria en masse in the headwinds of tapering by the Federal Reserve. Dr Alade is the acting governor until a new appointment to take over in June on the expiry of Sanusi’s five year term. We do not buy into the argument that the new person will be the “puppet” of the presidency.

“In our view the presidency’s understanding of the investment community does reach that far. Also, the National Assembly has to ratify the appointment and has its own agenda. We assume that it does not have to ratify the suspension. Clearly we do not know the identity of the new governor. We have said for some time that the new person could slow not reverse the tightening of bank regulation because he/she will have less influence over the industry’s executives”.

Stock market reacts

The Nigerian Stock Market had “reversed fortunes on the back of the CBN Governor’s suspension as the NSE All Share Index (ASI) sheds 147 basis points to close at 38,816.19. In the same vein, the market capitalisation shrank by N186.6bn to close at N12.4trillion. Activity level as measured by volume and value surprisingly advanced 59.4 per cent and 27.7 per cent to close at 484million units and N4.9trillion respectively.

“All sector indices declined today with the exception of the NSE Industrial Index advanced slightly by 0.2 per cent on account of gains in Dangote Cement 1.9 per cent. “The NSE Banking Index lost a whopping 4.5 per cent as all banks closed in the red. This loss can be primarily attributed to losses in UBA 7.5 per cent, FCMB 7.1 per cent and ETI 6.2 per cent.

The Oil and Gas followed suite with a with 2.7 per cent loss majorly attributed to Oando 6.4 per cent and Eterna Oil 4.9 per cent. Lastly, the Consumer Goods and Insurance Index lost 1.8 per cent and 1.2 per cent a piece. These losses were driven by capital reversals on the back the CBN governor’s suspension by the President.

The market breath (0.19x) buttresses the negative market sentiments with only 9 stocks advancing as against 46 decliners. Top gainers for the day were Oasis Insurance (8.6%), Neimeth 5.8 per cent and PZ 5.0 per cent while top losers were UBA 7.5 per cent, Vitafoam 7.4 per cent and FCMB 7.1 per cent.

Operators in capital and money market

Managing Director/CEO, Express Discount Asset Management Limited, Mr. Atiku Kafaru, in his reaction said “It has been long overdue that the CBN Governor, Lamido Sanusi should have gone. How can a man in such a position be running a parallel system with the government in place. It is not done so in developed countries.

It is a good omen for Nigerian economy and the financial markets in particular. Sanusi has not been fair with the Nigerian capital market. A central bank Governor should not be a talkative, because his position is a very sensitive position. You cannot see the Governor of Bank of England talking the way Governor Sanusi talks. I think he deserves the suspension, because he has outlived his usefulness. It should be a lesson to his successor, that he or she should always be very focus on its mandate and not be involved in politics.”

First Vice President, Chartered Institute of Stockbrokers (CIS) Mr. Emmanuel Ohanwusi Said “The announcement of his suspension is no longer news, considering the frosty relationship arising from the alleged missing funds and the ongoing political power play. The most important thing now is to immediately appoint the successor so that financial and economic analysts can attempt a close prediction of how the economy will behave.

It will also aid investors to make decision on their investment. Definitely, the capital market and the economy had been hurt by this announcement and for as long as there is an unclear succession plan of the CBN Governor. In the intervening period, Nigerians should be ready for a rough ride with the economy.”

Dr. Austin Nwede, Economist and lecturer, Lagos Business School, Pan Atlantic University reacting said “I think the suspension of Governor Sanusi is good for the financial markets and the economy in general. I have been saying this overtime that the kind of central bank Governor that Nigeria needs should be a person of good character, professional of high repute.

Sanusi has been sabotaging the government that he was supposed to work with in good faith. I was in a forum where the Minister of Finance complained and lamented that the CBN Governor never consulted her on the issue of NNPC and federation account before going to the press. Then such a Governor should not be there. The earlier he goes the better for the nation. Meanwhile, the effect of his suspension would be for a short moment. The effect on the financial markets would be temporal if any because the interim Governor, Sarah Alade, has been in the system with him. The CBN is an institution and not a man organization.

There is the Monetary Policy Committee (MPC) working with the CBN to achieve monetary stability. In fact, the issue of Sanusi is more political . He has made several comments that is not justifiable. Who is he working for. He does not know how to manage information, which is also key for managing the economy.”

Managing Director/CEO, Lambert Trust Limited, Mr. David Adonri

“The suspension of Governor Sanusi can erode foreign investors’ confidence in the financial market and the economy. I think his suspension is untimely and should have been allowed to finish his tenure.” President, Nigerian Shareholders Solidarity Association of Nigeria (NSSA), Chief Timothy Adesiyan

“The issue of Sanusi has been dragging for some time now. The suspension is unexpected at this moment. It is uncalled for, since he has almost finished his tenure. President Goodluck Jonathan should have removed him long before when it was obvious. But since he did not do that he should have been patient enough and allow him to conclude his tenure and handover properly to a his successor. With the situation, as it is now, the action might affect the market, though temporary.

However, since there is ongoing investigation against some of his action, it should be reminded that the shareholders are not happy with him, when he forcefully nationalized our three banks. The question is, are three banks doing well since they were taken over by AMCON? The answer is no.

Then what is the essence of nationalizing them. We the shareholders of these banks were shortchanged and we would like the issue to be revisited and investigated because we like justice to prevail. When two elephants are fighting it is the grass that suffers. So for the acting CBN Governor, I wish her well. She has been part of the system so there should be continuity. On the effect the action will cause is that international investors’ confidence would somehow be affected at the moment and later on would pick up once we have a substantial CBN Governor.”

National Co-ordinator, Proactive Shareholders Association of Nigeria, PROSAN, Mr Taiwo Oderinde said “It is a welcome development and even overdue for Governor Sanusi to leave the system. The shareholders have been crying and calling on the government to sack him but in their own wisdom he was still retained. Sanusi is not loyal to the government, hence should not be there.

This is a lesson to his successor. So, the successor should be a professional to the core and not a politician because that position is very critical and any taken by the Governor affect the entire economy. Sanusi has done more harm than good for the economy. It is easy to destroy than to repair. He does not merit the position. I don’t forsee any negative effect, afterall the financial markets is not at its best, still struggling.”

Bamidele Aturu a legal practional said in his own reaction said “News filtering in about the purported suspension of the Governor of the Central Bank of Nigeria, Mallam Sanusi Lamido Sanusi, by the President is the most egregious desecration of the rule of law and the principle of legality in Nigeria to date. It is unsurpassed in its blatant illegality and immorality.

The decision is symptomatic of the desperation that has gripped the presidency and its allies in the wake of the troubling allegations made by the Governor of the Bank that public officials in the NNPC are looting the country blind in the name of subsidy payments. To the best of my knowledge the allegation has not been coherently answered by the Corporation or by the Government.

As far as the law goes, the purported suspension of the Governor is unwarranted. Section 11 of the Central Bank of Nigeria Act, 2007 clearly lists the instances when the Governor or any of his Deputies can cease to remain in office. For the avoidance of any doubt whatsoever, none of such instances include suspension by the President.

The only mention of the word ‘suspension’ is in section 11(1)(d) and that relates to the removal of the Governor when he or she is disqualified or suspended from practicing his or her profession in Nigeria. Of course, the illegal suspension of the Governor is not from a professional body and is not at all contemplated by the law.

“It should be pointed out that the only occasion the President can recommend the removal of the Governor or exercise any disciplinary control over him is under section 11(1)(f) and that recommendation must be supported by two-thirds majority of the Senate before he can be removed.

Now the law is indubitably clear that the express mention of one thing is the exclusion of the other. In other words, if the law had intended that the “President exercises the power of suspension over the Governor of the Central Bank it would have expressly stated so, particularly as the same law provides for the removal of the Governor based on his suspension from professional practice.

For the avoidance of any doubt, the entire provision of section 11 of the

Dr Okonjo Iweala

The Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala, however assured that the suspension of Mallam Sanusi would not adversely affect the stability of the nation’s economy as the President Goodluck Jonathan administration would continue its tight fiscal and monetary policies.

According to her, “Of course since the news broke there have been concerns in the markets which is not unusual.  When there is movement of one of the major people managing the economy, there is bound to be some reactions but I just want to use this opportunity to focus on assuring market participants of the resolute attention that this government will be paying to managing this economy. Our objective remains to maintain macroeconomic stability.  That has been the hallmark of this administration”.

The minister noted that the macroeconomic stability achieved so far was a product of the government’s  stable economic policies and that the suspension of Mallam Sanusi would not affect their continuity, especially given the fact that the Acting CBN Governor, Mrs. Serah Alade has been directly in charge of policies at the CBN.

Her words, “it is the macroeconomic stability that has enabled us to continue to transform the different sectors of the economy and that will not change.

We will maintain tight fiscal policies.  We expect a continuation of the tight monetary policies that has been on at the central bank. We are confident that this will continue as the Acting Governor, Mrs. Serah Alade is the Deputy Governor, Policy, you will all recall.  So she has been part of crafting those policies that the former governor, Sanusi Lamido Sanusi, has been implementing.

“With this we will continue the policies that have brought about the fiscal and monetary stability that has been the bedrock of our economy. We hope market participants will get back to business as usual.  We believe the stability of the Naira will there and we will continue to manage the situation going forward.” Dr. Okonjo-Iweala admitted fluctuations and slight depreciation of the Naira following the break of the new of Sanusi’s removal but expressed optimism that the market should normalize after her assurances. “There will be no change in the policy stance of the government. The nation’s inflation has remained at a single digit at 8 per cent: external reserves at $ 4. 1.4 billion and fiscal deficit at 1.9 per cent of the GDP and a current account surplus. The Naira has fluctuated and depreciated a bit on this news but this announcement I am making that we will continue with the tightness of policies, we expect that the Naira will stabilize”, she said.

FG

Dr Reuben Abati Special Adviser to the President Media & Publicity in a statement yesterday said “Having taken special notice of reports of the Financial Reporting Council of Nigeria and other investigating bodies, which indicate clearly that Mallam Sanusi Lamido Sanusi’s tenure has been characterized by various acts of financial recklessness and misconduct which are inconsistent with the administration’s vision of a Central Bank propelled by the core values of focused economic management, prudence, transparency and financial discipline; Being also deeply concerned about far-reaching irregularities under Mallam Sanusi’s watch which have distracted the Central Bank away from the pursuit and achievement of its statutory mandate; and  Being determined to urgently re-position the Central Bank of Nigeria for greater efficiency, respect for due process and accountability, President Goodluck Ebele Jonathan has ordered the immediate suspension of Mallam Sanusi Lamido Sanusi from the Office of Governor of the Central Bank of Nigeria.

“President Jonathan has further ordered that Mallam Sanusi should hand over to the most senior Deputy Governor of the CBN, Dr Sarah Alade who will serve as Acting Governor until the conclusion of on-going investigations into breaches of enabling laws, due process and mandate of the CBN. The President expects that as Acting Governor of the Central Bank, Dr. Alade will focus on the core mandate of the Bank and conduct its affairs with greater professionalism, prudence and propriety to restore domestic and international confidence in the country’s apex bank.

“The Federal Government of Nigeria reassures all stakeholders in Nigeria’s financial and monetary system that this decision has been taken in absolute good faith, in the overall interest of the Nigerian economy and in accordance with our laws and due process.

Sanusi

The suspended CBN Governor, Lamido Sanusi has said that he may have to seek some form of legal advice over his suspension by the Nigeria’s President, Goodluck Jonathan. Mr Sanusi spoke to CNBC on the telephone yesterday morning and he said that his suspension did not come as a surprise, saying he was rather surprised that it had taken this long.

Reacting to the allegations of financial recklessness, the suspended Governor said that he was aware of the audit of the reporting council and that all the questions and concerns that were raised, he had provided answers to.

“We all know what this is about. This is about consequences for decisions I have taken. This is something that is long overdue. I am surprised it took them so long”, he said. Mr Sanusi went further to say that he may have to cross check the powers of the President to suspend a CBN Governor.

He said, “Even if I challenge it, I am not going back to the job, it will be in the interest of the institution to cross check once and for all if the President has the power to do this. The reason is if it’s not challenged, for now the next CBN Governors will not be independent for fear of being suspended by politicians. I do plan to have the courts confirm if indeed that authority exists and I will challenge it.”

When asked about the implications of his suspension on the market, Mr. Sanusi said, “Basically, my concern is for the safety of the market, I have had a wonderful time in service to my country. I would not want to see all of my work unravelled. No individual is worth it.”

Mr Sanusi said that he was in Niamey along with other Governors of West African Central Banks to meet with the President of Niger and President of Ghana, when the information reached him. He left the meeting to hand over to his deputy, Dr. Sarah Alade, whom he had been asked to hand over to and who “fortunately” was with him in Niamey, capital city of Niger.

According to him, “there is a legal question on whether the president can suspend a CBN governor when he cannot remove him. The court need to interpret it whether the president can suspend the CBN governor if not the next governor will not be independent”, he said. Mallam Sanusi said that the news of his suspension was broken to him by the Nigerian Ambassador to Niger Republic and that he immediately handed over to Mrs. Serah Alade who was herself at the same conference in Niamey.

According to him, he was surprised that it took the government so long to suspend him and said he hoped the development did not affect the CBN and the economy, negatively.

Mallam Sanusi praised himself for “a good job” and that he would have no reason to return to the apex bank as according to him, “it’s a final good bye”.

CBN Act goes thus:

CESSATION OF CBN GOV OFFICE

Disqualification and cessation of appointment.

(1) A person shall not remain a Governor, Deputy Governor or Director of the Bank if he is- (a) a member of any Federal or State legislative house; or

(b) a Director, officer or employee of any bank licensed under the Banks and Other Financial Institutions Act.

(2) The Governor, Deputy Governor or Director shall cease to hold office in the Bank if he-

(a) becomes of unsound mind or, owing to ill-health, is incapable of carrying out his duties;

(b) is convicted of any criminal offence by a court of competent jurisdiction except for traffic offences or contempt proceedings arising in connection with the execution or intended execution of any power or duty conferred under this Act or the Banks and Other Financial Institutions Act;

(c) is guilty of a serious misconduct in relation to his duties under this Act ;

(d) is disqualified or suspended from practising his profession in Nigeria by order of a competent authority made in respect of him personally;

(e) becomes bankrupt;

(f) is removed by the President:

Provided that the removal of the Governor shall be supported by two-thirds majority of the Senate praying that he be so removed.

(3) The Governor or any Deputy Governor may resign his Office by giving at least three months’ notice in writing to the President of his intention to do so and any Director may similarly resign by giving at least one months’ notice in writing to the President of his intention to do so.

(4) If the Governor, any Deputy Governor or Director of the Bank dies, resigns or otherwise vacates his Office before the expiry of the term for which he has been appointed, there shall be appointed a fit and proper person to take his place on the Board for the unexpired period of the term of appointment in the first instance if the vacancy is that of-

(a) the Governor or a Deputy Governor, the appointment shall be made in the manner prescribed by section 8 (1) and (2) of this Act; and

(b) any Director, the appointment shall be made in the manner prescribed by section 10 (1) and (2) of this Act.

The purported removal of the Governor of the Central Bank is a continuation of the atrocious illegalities perpetrated by the present administration. From Salami to the serial acts of infamy imposed on the people of Rivers State and now to Sanusi, one can say without any fear of equivocation that the cup of illegalities of this administration is full. If we don’t act now, we don’t know whose turn it would be next. We must challenge the desecration of the laws of our country by its Chief custodian. The Senate must view the so-called suspension of the Governor for what it is: a naked usurpation of its powers and privileges. There is no room for illegal removal of the Governor through the back door.

The Nigeria Bar Association now has an opportunity to redeem whatever is left of its image by demanding that the Attorney General of the Federation who is deemed to be privy to this embarrassing decision step aside or is declared persona non grata. The people and in particular the civil society must ensure that this latest rape of our laws does not stand.



Okonjo_Iweala assures on monetary, fiscal policies



The Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo_Iweala, yesterday assured that the removal of Mal. Sanusi would not adversely affect the stability of the nation’s economy as the President Goodluck Jonathan administration would continue its tight fiscal and monetary policies.

According to her, “Of course since the news broke there have been concerns in the markets which is not unusual.  When there is movement of one of the major people managing the economy, there is bound to be some reactions but I just want to use this opportunity to focus on assuring market participants of the resolute attention that this government will be paying to managing this economy. Our objective remains to maintain macroeconomic stability.  That has been the hallmark of this administration”.

The minister noted that the macroeconomic stability achieved so far was a product of the government’s stable economic policies and that the suspension of Mal. Sanusi would not affect their continuity, especially given the fact that the Acting CBN Governor, Mrs. Serah Alade has been directly in charge of policies at the CBN.

Her words, “it is the macroeconomic stability that has enabled us to continue to transform the different sectors of the economy and that will not change.  We will maintain tight fiscal policies.  We expect a continuation of the tight monetary policies that has been on at the Central Bank.

We are confident that this will continue as the new Acting Governor, Mrs. Serah Alade is the Deputy Governor, Policy, you will all recall.  So she has been part of crafting those policies that the former governor, Sanusi Lamido Sanusi, has been implementing.

“With this we will continue the policies that have brought about the fiscal and monetary stability that has been the bedrock of our economy.

We hope market participants will get back to business  as usual.  We believe the stability of the Naira will be there and we will continue to manage the situation going forward.”

Dr. Okonjo_Iweala admitted fluctuations and slight depreciation of the Naira following the break of the news of Sanusi’s removal but expressed optimism that the market should normalize after her assurances.  “There will be no change in the policy stance of the government. The nation’s inflation has remained at a single digit at 8 per cent: external reserves at $ 4. 1.4 billion and fiscal deficit at 1.9 per cent of the GDP and a current account surplus.

“The Naira has fluctuated and depreciated a bit on this news but with this announcement I am making that we will continue with the tightness of policies, we expect that the Naira will stabilize”, she said.