Amendment of Central Bank of Nigeria Act Scaled Second Reading in House of Representatives

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

On Thursday the House of Representatives went on the Second Reading for the amendment of the Central Bank of Nigeria.

The proposed amendment according to the sponsor of the bill, Francis Waive, a Member, of the House of Representatives representing Ughelli North/South/Udu seeks to address several important issues of the Act to improve the transparency, effectiveness, and accountability of the apex bank and its operations.

Speaking on the debate at a plenary session, Waive emphasised the need to amend Section 6 of the Central Bank of Nigeria (CBN) Act as it centers on 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.

• 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.

Also, the amendment to the bill, which is in its Second Reading, seeks to prevent groups and reduce the tendency for conflict of interest.

He added, 

• 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.

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