Intense public outcry and mounting pressure from various stakeholders have compelled the National Assembly to suspend the proposed amendments to the Central Bank of Nigeria (CBN) Act 2007.
This decision comes amid widespread concerns about the potential implications of the amendments on the country’s economic stability and the independence of the CBN.
The proposed amendments, spearheaded by Senator Mukhail Adetokunbo Abiru and supported by all 41 members of the Senate Committee on Banking, Insurance, and Other Financial Institutions, aim to amend the 2007 CBN Act, sought to alter the governance structure and operational autonomy of the CBN.
Proponents of the amendments argued that the changes would enhance oversight and accountability within the CBN, aligning its operations with broader national economic goals.
However, the amendments faced immediate backlash from a broad spectrum of stakeholders, including economists, business leaders, civil society organizations, and multilateral lenders, who noted that the amendments would undermine the CBN’s independence, which is crucial for maintaining monetary policy stability and investor confidence in Nigeria’s economy.
Opposition from the organised private sector
Sources, who chose to be anonymous, told Nairametrics that key members of the organised private sector appealed to the presidency and the leadership of the National Assembly to halt the amendment of the CBN Act 2007.
However, the sources declined to mention the names of the bigwigs that intervened but noted they are some of Nigeria’s richest billionaires.
In its latest report on Article IV consultation with Nigeria, the International Monetary Fund (IMF) urged caution regarding the ongoing amendment to the CBN Act.
The IMF noted that such a move could hamper the CBN’s autonomy and harm monetary policy management.
The Chartered Institute of Stockbrokers (CIS) and Association of Securities Dealing Houses of Nigeria (ASHON) recently expressed concern over the proposed amendment seeking to subject the annual budget of the CBN to approval from the National Assembly.
Controversies trigger suspension
In a statement by Prof Uche Uwaleke, Special Adviser to the Chairman of the Senate Committee on Banking, Insurance and Other Financial Institutions, it was disclosed that the National Assembly has decided to suspend the amendments due to the controversies around it.
The statement read: “Be that as it may, let me seize this opportunity to inform you that given the controversy this has generated, the National Assembly Committee on Banking, Insurance and Other Financial Institutions has decided to put on hold the entire amendment process to allow for more consultations.”
One of the most critical aspects of the proposed amendments is the involvement of the Coordinating Committee for Monetary and Fiscal Policies in setting interest rates for the CBN’s temporary advances to the Federal Government.
However, Uwaleke stated that the amendment is not intended to transfer interest rate decisions from the CBN to a proposed committee reported to be chaired by the Minister of Finance.
Uwaleke noted: “The fact is that the amendment Bill proposes a Coordinating Committee as an institutional framework for the alignment of fiscal and monetary policies. Its aim is neither to usurp the roles of the Monetary Policy Committee of the Bank nor weaken the instrument independence of the CBN.”
What you should know
- Some of the critical changes made in the proposed amendments include proposing a bill to amend the CBN Act of 2007, introducing a 21-year imprisonment penalty for the breach of Section 38 of the CBN Act limit on ways and means advances.
- The amendment also prohibited the Chairman of the CBN board, Governor, and Deputy Governors of the CBN from engaging in political activities or becoming members of any political party for three years after their tenure.
- As the debate continues, the focus will now shift to finding a balanced approach that enhances the CBN’s accountability without compromising its crucial role in steering Nigeria’s monetary policy.
