The effort by some members of the National Assembly to pass a bill removing the governor of the Central Bank of Nigeria (CBN) as chairman of the board of directors of the CBN, and to remove the power of the board to fix the bank’s budget and set the salaries of its staff is completely wrongheaded and should be dropped.
Such an amendment to the CBN Act of 2007 would finally destroy the institution by disrobing it completely of its institutional independence as enshrined in the Act. It would make the bank a statutory corporation under the law, to become a ministry or a mere agency or department of the government. And it would render the bank an open playground for politicians who are the custodians of our dysfunctional governance.
Granted, the CBN has already been politicised since mid-2014 when its current governor was appointed. But that is a function of incompetent, selfish political and institutional leadership, not a de jure legal reality. This proposed bill, if passed, will legalise an abnormality and worsen it, when what we should be doing is seeking to reverse an anomaly that has had hugely negative consequences for the Nigerian economy.
There are very good reasons why the governor of the bank is the chairman of its board of directors. This is the case in most central banks around the world. This framework protects central banks from external interference. A central bank’s policies and its internal administration should objectively advance the interest of the national economy, not the partisan agendas of political parties or individuals. Imagine a prominent politician from the All Progressives Congress or Peoples Democratic Party or any other party appointed the board chairman of the CBN. Well, some would argue that this has already happened, when its governor (and chairman of the CBN Board) was aspiring to contest to become the President of Nigeria in 2023 on the platform of the ruling party while refusing to resign his position in the bank.
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It’s part of the required independence that the bank creates its own budget and set its staff pay. It is no accident that the CBN is arguably the top repository of public sector talent in Nigeria. This is because of massive investments by the bank in staff development, coupled with high standards of recruitment (at least during the time I was there, I can’t speak for afterwards).
What the CBN needs is a new lease of life after the 2023 elections and a new, more professional, competent and depoliticised institutional leadership after the tenure of the current governor ends. But the political will from a President who understands why the bank should not be turned into a political appendage of the ruling party will be required. This in turn requires an elected political leader who understands economics and how national economies, including the proper role of an independent central bank, should function.
The CBN should be accountable, yes, but let’s not throw the baby away with the bath water. The CBN Act already requires the bank to periodically brief the National Assembly on its operations. The President of Nigeria approves and signs the bank’s annual reports (strangely, there has been no annual report for the past few years), and in addition is empowered to approve any change to the legal tender and any investment by the bank outside Nigeria. What needs to be done is to make these accountabilities effective, not to gut one of the most unique and important institutions in any country, and the unique nature of which requires its independence in order to work effectively for the government and the citizens.
Kingsley Moghalu was a deputy governor of the CBN from 2009 to 2014. He is the founder and CEO of Sogato Strategies LLC, a global investment advisory firm.
