The Senate has bowed to public pressure by suspending the planned public hearing on the amendment to the Central Bank of Nigeria (CBN) Act 2007 to allow for further consultations and input from key stakeholders.
The Senate Committee on Banking, Insurance and Other Financial Institutions said the suspension followed the controversy generated by the amendment process for the bill titled: ‘An Act to Amend the Central Bank of Nigeria Act No. 7 of 2007.’
The Chairman of the committee, Senator Tokunbo Abiru, disclosed this in a statement issued on Saturday through his Special Adviser, Prof. Uche Uwaleke.
In the statement, the committee also denied alleged plans by the National Assembly to transfer interest rate decisions from the CBN to a committee to be chaired by the Minister of Finance.
“This is completely untrue. 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.
“For the avoidance of doubt, Section 12 of the current Act establishes the Monetary Policy Committee, as well as stipulates its functions and composition. These provisions are all retained in the amendment bill.
“Be that as it may, let me seize this opportunity to inform you that given the controversy this has generated, the Senate Committee on Banking, Insurance, and Other Financial Institutions has postponed the planned public hearing to allow for further consultations with and inputs from key stakeholders,” the statement said.
The controversial bill was sponsored by Senator Abiru and co-sponsored by all 41 members of the Senate Committee on Banking, Insurance, and Other Financial Institutions.
The legislation, which had passed its second reading and was scheduled for a public hearing on May 30, seeks to modify the CBN’s autonomy by subjecting its budget to National Assembly approval and establishing a new Coordinating Committee for Monetary and Fiscal Policies.
Economic and financial experts have argued that these changes could introduce political interference in monetary policy decisions, hampering the central bank’s ability to manage the economy effectively and objectively.
Key aspects of the bill the lawmakers are seeking to amend include the establishment of a seven-member Coordinating Committee for Monetary and Fiscal Policies to be chaired by the Minister of Finance; tenure of CBN governor and deputy governors to be set at a single non-renewal term of six years for the governor and the deputy governors; appointment of a minimum of one career staff of the Bank in the Committee of Governors and appointment of at least one female among the external directors.
The bill also seeks to establish the position of Chief Compliance Officer in the rank of a deputy governor, who reports directly to the Board and may occasionally be summoned to appear before the relevant committee of the National Assembly; limit to temporary advances to the federal government; and issuance of new legal tender to replace existing ones.
Because the governor of the apex bank also serves as the Chairman of the Board, the bill proposes that the Board Committees should be headed by Non-Executive Directors instead of the deputy governors.
Equally, the bill also proposes that the CBN governor appears on a semi-annual basis while the National Assembly, in the exercise of its constitutional duties should reserve the power to invite the governor to make presentations from time to time as the need arises.
The bill also proposes publishing a monetary policy report and an interim financial report every six months.
It also proposes that where the governor fails to make a report to the President and the National Assembly as required by law, he should be served with a warning letter by the National Assembly and if the failure persists, a recommendation from the National Assembly would be made for the governor’s suspension from office by the president, among others.
Before its suspension, the Senate Committee on Banking, Insurance, and Other Financial Institutions had invited members of the public to a one-day public hearing in Abuja.
The proposed amendment has however generated controversy.
Some stakeholders have argued that the proposed amendment is commendable as it was designed to entrench the culture of compliance, strengthen corporate governance, and reposition the apex bank for improved performance in attaining its mandate.
However, many banking and economic experts have opposed it, contending that it may end up eroding the powers of the banking sector regulator.
For those who hold this view, the exercise would not only put the country in a bad light but would also send negative signals to investors.
According to them, having an independent central bank remains the accepted practice across all major world economies.
Only recently, the International Monetary Fund (IMF), in its Article IV consultation on Nigeria sued for caution, raising concerns that the amendments to the CBN Act might weaken the apex bank’s autonomy.
However, in a chat on Saturday, Uwaleke who commented on the amendment bill told THISDAY that the role of the Coordinating Committee had been misinterpreted to mean that it is meant to replace the Monetary Policy Committee (MPC) of the CBN.
“Far from it. It is simply meant to provide a platform for proper alignment of fiscal and monetary policies. Section 12 of the current Act, which establishes the MPC and stipulates roles and composition is not tampered with,” he said.
Stakeholders in the capital market had earlier voiced reservations over the proposed amendments, warning of potential adverse economic consequences.
The Chartered Institute of Stockbrokers (CIS) and the Association of Securities Dealing Houses of Nigeria (ASHON) had also raised concerns that the bill could undermine the independence of the CBN.
Ndubuisi Francis, James Emejo and Sunday Aborisade
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