Bill to Amend CBN Act Scales Second Reading

A bill to amend the Central Bank of Nigeria Act scaled second reading at the House of Representatives on Thursday.

The proposed amendment, according to the sponsor of the bill, Francis Waive, seeks to address critical aspects of the Act to enhance the effectiveness, transparency, and accountability of the apex bank and its operations.

Leading the debate at a plenary session on the floor of the House, Waive, who represents Ughelli North/South/Udu Federal Constituency, Delta State, emphasised the need to amend Section 6 of the CBN Act as it concerns the necessity of separating the Chairman of the Board of the apex bank from the CBN Governor.

He said, “The proposed amendment introduces a crucial change in the composition of the CBN’s Board of Directors as outlined in Section 6 of the Principal Act. The proposed amendment adds a new paragraph, Section 6(2)(a), which mandates that the Chairman of the Board shall be a former Governor of the CBN, a former Chairman of the Bank, or a former Managing Director of a bank.

“This provision introduces an essential shift by requiring the Chairman to have a background outside of the current leadership of the CBN.”

According to the lawmaker, separating the Chairman of the Board from the Governor would enhance independence and oversight and “ensure a more effective system of checks and balances within the CBN’s governance structure. This differentiation reduces the concentration of power, enhances accountability, and provides an avenue for unbiased oversight of the CBN’s operations.”

Additionally, the amendment seeks to reduce the potential for conflict of interest.

He continued, “A chairman selected from outside the current leadership of the bank diminishes the likelihood of conflicts of interest that could arise when the governor also assumes the role of the chairman. This separation reduces the risk of policy decisions being influenced by personal or vested interests.

“An independent chairman can serve as a symbol of impartiality and transparency, thereby increasing public confidence in the CBN’s operations. This is particularly important in preserving the integrity of monetary and financial policies.

“By requiring the Chairman to have experience as a former Governor, Chairman, or Managing Director of a bank, the amendment ensures that the Chairman possesses the necessary financial and economic expertise to provide effective leadership to the Board,” he added.

The bill is also seeking an amendment to Section 7(1) to enhance the operational efficiency and accountability of the apex bank to Nigerians.

The amendment provides that “The Governor or, in his absence, the most senior Deputy Governor shall be in charge of the day-to-day management of the Bank and shall be answerable to the Board for his acts and decisions. ”

Waive noted that “this is opposed to the current provision, which gives the Governor the power to choose which of the Deputy Governor to act in his absence. This amendment clarifies the chain of command within the CBN, ensuring that the Governor or the most senior Deputy Governor takes on the role of managing the Bank’s daily operations. This allocation of responsibility minimizes ambiguity and ensures efficient decision-making.”

The provision that the governor or deputy governor is accountable to the board for their actions strengthens oversight. It enhances the Board’s role in reviewing operational decisions and ensures that such decisions are aligned with the broader objectives of the CBN.

In the amendment to Section 8(3) dealing with the determination of salaries, the bill addresses the Governor and Deputy Governors of the CBN subject to the approval of the Revenue Mobilisation and Fiscal Commission and not the Board of the Bank as obtained currently.

“Section 8 (3) The salaries or allowances including pension and other allowances payable to the Governor and to the Deputy Governors shall be as stipulated, from time to time, by the Revenue Mobilization Allocation and Fiscal Commission subject to approval of the President,” the proposed amendment reads.

According to the lawmaker, “By stipulating that the compensation of the Governor and Deputy Governors be determined by the Revenue Mobilization Allocation and Fiscal Commission, subject to the President’s approval, this amendment ensures an independent and objective process for setting remuneration,” he added.

On fiscal responsibility, the amendment proposes that “the exchange rate of the Naira shall be determined, from time to time, by a suitable mechanism devised by the Bank for that purpose, provided that such rates shall at all times be uniform throughout the country both at the Bank, commercial banks or any such persons licensed to carry on the business of Bureau De Change.”