The Chartered Institute of Stockbrokers (CIS) and Association of Securities Dealing Houses of Nigeria (ASHON) have expressed concern over the proposed amendment of the Central Bank of Nigeria (CBN) Act No. 7 of 2007 seeking to subject the annual budget of the CBN to approval from the National Assembly.
The group in a statement said that such legislation will lead to the politicisation of monetary policy decisions by the apex bank and adverse economic consequences.
Furthermore, the statement noted that other amendments to establish a Coordinating Committee for Monetary and Fiscal Policies could impede the apex bank’s ability to manage the economy objectively.
Oluropo Dada, President and Chairman of the Council of CIS, emphasized the crucial role of the central bank in maintaining economic stability and upholding international credibility saying, “Safeguarding the independence of the Central Bank of Nigeria is crucial for aligning with global economic best practices and ensuring decisions are driven by sound financial principles, free from undue influence,”
Furthermore, the Chairman of ASHON, Sam Onukwue, highlighted the potential impact on investor confidence, international credit ratings, and the overall perception of the bank and the country within the international community.
He stated, “An independent central bank is a cornerstone for maintaining the country’s standing in the global financial community, which directly affects investor confidence, credit ratings, and the overall economic outlook,”
Although both organizations acknowledged the merit of some proposed amendments aimed at enhancing corporate governance and compliance, they stressed the importance of considering the broader ramifications.
What you should know
In its latest Article IV consultation report on Nigeria, the International Monetary Fund (IMF) urged caution regarding the ongoing amendments to the CBN Act. The IMF noted that such changes could undermine the CBN’s autonomy and adversely affect monetary policy management.
- The CBN Act amendment bill, spearheaded by Senator Mukhail Adetokunbo Abiru, introduces stringent measures for interest rates, limits advances to 10% of the government’s revenue from the previous three years, and mandates repayment within 12 months.
- While some of the proposed amendments have been lauded considering the abuse of the apex bank during the last administration, others have raised concerns.
- The National Assembly is scheduled to hold a public hearing on the bill on November 30th, 2024 where members of the public and stakeholders will air their views on the provisions of the bill and its merits and demerits.
- As the public hearing approaches, financial market participants, economists, and analysts will closely monitor the proceedings and subsequent legislative actions. The outcome will have significant implications for Nigeria’s economic policy framework and its position in the global economic landscape.