EXPLAINER: Here are what bills to amend CBN Act seek to achieve

Two bills seeking to amend the Central Bank of Nigeria (CBN) Act scaled second reading at the Senate last week.

The bills, which stirred a robust debate, were introduced to enhance the transparency and efficiency of the CBN’s operations as well as to reduce the power of the governor.

The first bill, titled ‘A Bill for an Act to amend the Central Bank of Nigeria Act and for Other Related Matters’, was sponsored by Darlington Nwokocha, a senator representing Abia Central, while the second, titled ‘A Bill for an Act to amend the Central Bank (Establishment) Act 2007’, was sponsored by Sunday Karimi, a senator representing Kogi West.

“The two bills that are brought to the Senate are commendable and the robust debates that took place showed the passion in the minds of every senator here in making sure that all is done to put the apex bank in the best position to perform its function in a way that the country’s interest will be well protected,” Barau Jibrin, the deputy Senate president, who presided over the debate, said.

The Senate Committee on Banking and Finance is expected to report back on the CBN Amendment Bill on November 8.

Here are the key amendments that the bills, which have been consolidated by the upper chamber, are proposing:

1. To prohibit the use of foreign currency in local transactions in Nigeria.

They seek to criminalise the use of foreign exchange for payment of goods and services in domestic trade in Nigeria, except in foreign exchange transactions. The bill is proposing a ban on the use of foreign currency for local transactions, in a bid to strengthen the naira.

It seeks to amend Section 20 with the insertion of Section 20 (A). The proposed amendment reads: “20(A) Prohibition of the use of foreign currency in democratic transactions: No person or body corporate shall use any foreign currency as a means of exchange for goods, services and other transactions in markets, supermarkets, hotels, restaurants, airports and other places of business in Nigeria except by a bank, licensed Bureau De Change and other financial institutions duly authorised by the CBN to trade, deal and use such currency and no individual or business entity in Nigeria shall advertise, denominate or price its goods or services in any currency other than the Nigerian naira and kobo.

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2. Ban on partisan politics

The bill seeks to amend section 9 of the Act to ban the CBN governor and his deputies from politics while in active service. The Act stipulates that the “Governor and the Deputy Governors shall devote the whole of their time to the service of the Bank and while holding office shall not engage in any full or part-time employment or vocation whether remunerated or not except such personal or charitable causes as may be determined by the Board and which do not conflict with or detract from their full-time duties.”

But the proposed amendment reads: “Notwithstanding the provisions of this Act or any written law in existence, the Governor and the Deputy Governor of the bank shall not participate directly or indirectly in partisan politics, nor contest any election, during their tenure in office.”

This proposed amendment sparked a lot of reactions from lawmakers, especially following the action of Godwin Emefiele, the former governor of the bank.

3. Reconstitution of the board of CBN.

The CBN has 12 members on its board, of whom 10 are members of the management team. The current law stipulates that there shall be the chairman; four deputy governors; the permanent secretary of the Federal Ministry of Finance, five directors, and the accountant-general of the federation.

The bill proposes that the auditor-general of the federation, chairmen of the Federal Inland Revenue Service, and Chartered Institute of Bankers in Nigeria be represented on the board of the CBN.

Read also: No plans to redenominate naira — CBN

4. Establish the position of chairman of the board

The bill seeks to establish the position of chairman of the board. Section 6 of the CBN Act provides that the board shall consist of a governor who shall be the chairman.

The bill proposes separating the head of management from the head of the governing board in line with national and international good corporate governance practices, enshrining real-time controls and effective accountability in the conduct of central banking in Nigeria.

It seeks to establish the position of the chairman of the board of the CBN with cognate qualifications and experience suitable for achieving the renewed objectives of the Bank.

Lawmakers note 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.

5. Subject remuneration of CBN staff salaries to the Salaries and Wages Commission.

The bill seeks to amend section 8 subsection 3 of the CBN Act, which stipulates that the salaries, fees, wages, or other remuneration or allowances including pension and other allowances payable to the governor and the deputy governors shall be as stipulated from time to time by the board subject to the approval of the President.

However, 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.

However, most lawmakers were against this amendment and insisted that the CBN should continue to determine its remuneration.