CBN Act Amendment: Cutting the Head Off to Treat Headache?

There is palpable anger against the Emefiele regime that held sway at the Central Bank of Nigeria from June 2014 to June 2023, even one year after its sack, which is understandable considering the treacherous looting of the national patrimony, the flagrant abuse of office and the avoidable suffering he and his co-travelers unleashed on Nigerians through the deliberately flawed implementation of some of its policies, some of which were also patently ill-timed.

Without doubt, one episode of the series of bungling the bank’s policies which is likely to remain fresh on the minds of Nigerians is the botched currency redesign which begun on December 15, 2022 and was originally scheduled to end on January 31st, 2023 but kept dragging on and remained inconclusive until it was finally suspended. The shoddy handling of the exercise which plunged the entire nation into confusion, business dislocation, needless deaths arising from lack of access to urgently needed funds for treatment of some seriously sick persons among other fallouts cannot be forgotten in a hurry.

It is therefore not surprising that emotions run riot in many circles whenever the name of the Central Bank of Nigeria is mentioned in recent times. It is also not entirely surprising that lawmakers have actually activated a process targeted at amending the CBN Act,2007 as it is well within their rights and well justified.

The word of caution however is that the amendment must not be emotion-driven but must proceed from the premise of reason and good judgement which upholds and protects the independence of the institution that is traditionally vested with such critical functions as printing of national currency, economic stabilization, banking sector supervision, banker to government and economic advisory. This autonomy should essentially be protected and be seen to be protected. Any detraction from this principle will open it up to be played as a pawn by narrow-minded powerbrokers as well as vested interests and can only be a recipe for economic confusion and doom!

Corrective measures must be founded upon the need to restore the bank’s integrity, objectivity, sensitivity and professionalism without hampering its effectiveness and efficiency . The Act as it currently stands suffices largely for our needs.

One of the proposals which hits directly at the autonomy of the bank and should not be considered at all is the demand for the bank to submit its budget to the legislature for approval. To put the bank at the mercy or whims and caprices of the legislature in this manner is tantamount to castrating it. Running, cap in hand, to seek for approval for its budget apart from being an unnecessary distraction which might stall its market responsiveness, is totally antithetical to the autonomy of the bank.

The push for a single 6-year tenure for the Governor of the Central Bank of Nigeria will most likely avail nothing. After all, the false steps of Emefiele began quite early when he forayed into development banking, beyond the traditional confines of monetary policy and financial system stability. For example, the Anchor Borrowers’ Scheme was established in November 2015 barely 17 months after his assumption of office. His forex policy that was fraught with all kinds of irregularities and malpractices also began in his first tenure. The point here is that a perfidious or reckless personality can execute his scam within his first year of assumption. The important thing is for the appointing authority to be able to promptly spot the signs when derailment sets in and to institute the process of abatement in a timely fashion. With the former regime, Emefiele was a kind of hero and would most likely have retired with his loot and with applause to boot if this Tinubu administration had not emerged and insisted on his probe. We should not foreclose the possibility of emergence of a prodigy as Governor of the central bank in the nearest future who will be well deserving of tenure renewal.

Come to think of it, doesn’t it sound ludicrous to assume or believe that Emefiele acting alone and without support, overtly or covertly, from the powers that be, could have trampled so brazenly on the extant processes without reprimand or executed such humongous heist as is currently being revealed?

Another amendment being sought by the Senate’s Committee on Banking, Insurance and other Financial Institutions which smacks of a hijack attempt of the Central Bank’s primary mandate is the recommendation of a 7-member Coordination Committee for Monetary and Fiscal Policies to be chaired by the Minister of Finance. Though denied by the senate Committee, there are strong fears that this amendment could provide a leeway for the Minister to usurp the role of the apex bank with the attendant high probability that in such a setting fiscal and political interests could consistently trump pure monetary, price stability considerations.

Operation of the committee is also likely to effectively shift the role of setting interest rates on temporary advances to the government from the central bank to politicians and other behind-the-scene influence-peddlers whose interests are usually known to be primarily self-motivated especially in our clime.

The proposal to separate the position of the Chairman of the bank’s board from that of the governor may end unilateral malfeasance while giving way for collusion between them. In many of the government agencies that parade both Board Chairmen and Chief Executives, has sleaze been averted?

As has been made evidently clear in the foregoing analysis, many of the areas being targeted by the National Assembly for amendment in the CBN Act, are akin to cutting off the head in order to treat a headache but we do know that a headless body is a dead body.

 In conclusion, what is required is a strengthening of the internal control systems, greater vigilance on the part of the Presidency, institution of tougher sanctions against erring Governors and a sustained focus by the bank on its core mandate. We should not send the wrong signal to the international community that we do not align with global best practices thereby creating unnecessary problems for ourselves.

Dayo Omoogun is a journalist, publisher, public affairs analyst based in Abuja.