Senate initiates plan to Reduce CBN Governor’s Powers

The Nigerian Senate

The Senate has begun moves to reduce the powers of the CBN governor by removing him as chairman of the board of the apex bank.

The move would review CBN Act No. 7 of 2007, which makes it mandatory for any incumbent governor of the CBN to also serve as the chairman of its board.

The proposed amendment will separate the head of management from the chair of the governing board in line with national and international governance practices.

The CBN Act also stated that the board of the bank shall include the governor as chairman, four deputy governors, permanent secretary of the Federal Ministry of Finance, five directors, and the Accountant General of the Federation.

Accordingly, the amendment seeks an additional position of a deputy governor to represent the six geopolitical zones in the country for robust engagement in the administration and policy of the bank.

The lawmakers also proposed to bar the CBN Governor or the deputy governors from partisan politics or contesting elections while in office to avoid conflicts of interest.

The CBN has 12 members on its board, of whom 10 are members of the board’s management team.

The development comes following two separate bills sponsored by senators Sunday Karimi and Darlington Nwokocha to include the Auditor General of the Federation, chairmen of the Federal Inland Revenue Service, and Chartered Institute of Bankers as members of the Board of CBN for synergy in fiscal and monetary policy.

In their lead debate, the lawmakers pointed out that a different person with the requisite qualifications and required knowledge of monetary and financial policies should be made Chairman of the Board.

They added that the separation of the two positions would enable any sitting CBN governor to focus more on fiscal and monetary policies than the politics of the institution.

The amendment further proposes to allow the senior deputy governor to act on behalf of the CBN governor in the circumstances stated in Sections 7 and 13 of the Principal Act when the governor is absent.

The proposed legislation provides that the Salaries and Wages Commission shall examine, streamline, and recommend salary scales and fix their emoluments and salaries for all CBN staff to ensure transparency and fairness.

The bill also seeks to criminalise the use of foreign exchange for payment of goods and services in domestic trade in Nigeria, except in foreign exchange transactions.

According to the senators, the amendments will ensure that the banking system is repositioned to play its primary role of financial intermediation for the benefit of investments and economic growth in Nigeria.

The bill, which scaled second reading, received diverse contributions from lawmakers, with some for and some against, given recent narratives surrounding the activities of CBN.

The bill is referred to the Committee on Banking, Insurance, and Other Financial Matters for further legislative input to report back in two weeks.