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In a significant legislative move, the Senate conducted the second reading of a bill aimed at amending the Central Bank of Nigeria (CBN) Act 2007 during its plenary session on Tuesday. The bill, sponsored by 41 members of the Committee on Banking, Insurance, and other Financial Institutions, seeks to modernize and enhance the regulatory framework governing the CBN.

Debating the Bill:

Chairing the debate on the bill’s general principles, Senator Adetokunbo Abiru (APC-Lagos) highlighted the timeliness of the proposed amendments. He underscored that the existing CBN Act of 2007, in effect for over 16 years, had not adapted to the evolving financial landscape and growing changes to the bank’s balance sheet.

Senator Abiru emphasized the challenges arising from fiscal dominance affecting monetary policy implementation. The proposed amendments aim to fortify the CBN in fulfilling its primary mandate of maintaining monetary and price stability, aligning its governance mechanisms with global best practices.

Key Amendments Proposed:

Coordinating Committee for Monetary and Fiscal Policies:

Introduction of a Coordinating Committee for Monetary and Fiscal Policies. Functions include setting internally consistent targets for monetary and fiscal policies to control inflation and foster sustainable economic growth. Caps on fiscal deficit to avoid direct monetary financing, such as “Ways and Means.”

Membership of the Proposed Committee:

Minister of Finance (Chairman)
Minister of Budget and Economic Planning
Minister of Industry Trade and Investment
Minister of Agriculture
Governor of the Central Bank of Nigeria
Chief Economic Adviser to the President
Director General of the Securities and Exchange Commission

Single Non-Renewal Term for Governor and Deputy Governors:

Proposing a single non-renewable term of six years for the Governor and Deputy Governors, aligning with global best practices.

Governor and Deputy Governor Vacancies:

In the event of a vacancy, President’s power to appoint an acting Governor temporarily. Substantive appointments for a fresh term rather than completing the tenure of the previous official.

Creation of Chief Compliance Officer Position:

Establishment of the office of a Chief Compliance Officer, of the rank of a Deputy Governor. Direct reporting to the Board with occasional appearances before the relevant National Assembly committee. Focus on strengthening internal control systems to ensure compliance with public accountability and transparency requirements.

Next Legislative Steps:

The bill has been referred to the Committee on Banking, Insurance, and other Financial Institutions for further legislative scrutiny. Deputy President of the Senate, Senator Barau Jibrin (APC-Kano), announced that the committee would provide additional legislative inputs, and the bill is expected to return to the plenary session in two weeks. This proposed legislative overhaul aims to equip the CBN with the necessary tools to navigate the dynamic financial landscape effectively.

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