Nigerian President Bola Tinubu, weeks after he suspended the nation’s central bank governor, appointed a special investigator to examine the monetary authority’s operations.
Tinubu reappointed Jim Obazee as chief executive officer of the Financial Reporting Council of Nigeria and made him the special investigator, according to a letter signed by the president and dated July 28.
While it didn’t spell out specific allegations of corruption against the central bank, the letter directed Obazee to assemble a team to investigate the monetary authority and its related entities and work with security and anti-corruption agencies.
Investors took the development in their stride. The yield on the nation’s 2027 dollar bonds declined 11 basis points to 9.63% as of 1:25 p.m. in London — the lowest the yields have traded since May 2022.
A central bank spokesman didn’t respond to a request for comment about the investigation.
The move is the latest against the Central Bank of Nigeria after Tinubu ousted Governor Godwin Emefiele, soon after he was inaugurated as president on May 29 on the basis of an ongoing investigation of the central banker’s office.
Emefiele was later arrested by the State Security Service — which is similar to the US Federal Bureau of Investigation — and subsequently charged with possessing a single-barreled shotgun and 123 rounds of live ammunition without a license.
Under Emefiele the central bank maintained a multiple exchange rate system dominated by a tightly controlled official rate, cutting off access to many businesses and individuals, which in turn drove demand to the unauthorized black market.
This meant anyone buying dollars on the official market could make a profit by selling in the parallel market. Tinubu has since reorganized the exchange rate system as part of a series of reforms to galvanize the economy, including abolishing costly gasoline subsidies.
The central bank also extended an $50 billion overdraft to the previous government, plus loans to businesses and individuals which may be difficult to recover.
Obazee will report directly to the president’s office and has been asked to give a weekly progress report to Tinubu.
Obazee, who was head of the FRC from 2010 until 2017, has previously investigated the central bank. In 2014, former President Goodluck Jonathan suspended the then Central Bank Governor Lamido Sanusi, based on allegations of financial recklessness made against him by the FRC. Sanusi denied any wrongdoing.
Read More: How Nigeria’s Leader Is Shaking Up a Shaky Economy: QuickTake
The probe of the central bank follows a series of radical steps by Tinubu to reform the economy that have been welcomed by investors, though a surge in food prices in the West African nation has led to threats of protests from labor unions.
An index of the nation’s dollar bonds has handed investors a 13% return since the president took office. Local-currency bonds have rallied 7%, while the NGX All Share Index has jumped 23%, both in naira terms.
--With assistance from Srinivasan Sivabalan.
(Updates with latest bond yields in fourth paragraph.)
