Nigerian court ruling deepens concerns over central bank independence

A Nigerian court yesterday dismissed former central bank governor Sanusi Lamido Sanusi's appeal against a presidential decision to remove him from office earlier this year – reigniting a debate over central bank independence in Africa's largest economy.

Sanusi was fired by Nigerian president Goodluck Jonathan in February for "various acts of financial recklessness and misconduct" after he accused the state oil company of embezzling $20 billion in revenues. Sanusi appealed the decision shortly after – questioning its legitimacy and stressing the need for more clarity in what seemed a legal grey area.

But Justice Gabriel Kolawole ruled that the court did not have jurisdiction to hear the matter, referring to the case as an employee-employer dispute, which in Nigeria are generally heard in industrial court. The judge thereby dismissed Sanusi's argument that he was an employee of the Central Bank of Nigeria's board, rather than the government.

The president's counsel, Fabian Ajogwu, told CNBC Africa that the federal court had "essentially put the position in law that Sanusi is indeed a government employee".

"The central bank is an independent institution and should not be interchanged by an occupier," Ajogwu said. "What Africa needs are strong institutions, not necessarily strong men. The suspension of Sanusi demonstrates that nobody is above the law."

Under the Central Bank of Nigeria Act 2007 the governor can be removed by the president with the support of at least two-thirds of Nigeria's 109 senators – who, in this case, were not consulted.

The Act also states the governor can be removed for "serious misconduct", but there is no mention of whether the president or the legal system is responsible for making this judgment.

Razia Khan, head of Africa research at Standard Chartered, said: "Investors are nervous about central bank independence under the circumstances, and will scrutinise future monetary policy decisions for reassurance."

In a separate ruling last month, the government was ordered to pay Sanusi 50 million naira ($300,000) in damages for confiscating his passport and briefly detaining him in conjunction with the suspension.

According to reports, government officials seized Sanusi's passport again in April when he tried to board a plane to France.