The Senate has passed a bill for an Act to limit the tenure of the Central Bank of Nigeria (CBN) Governor and Deputy Governors to a single, non-renewable term of six years. This decision was reached after discussions during the second reading of the proposed amendment led by Senator Tokunbo Abiru, Chairman of the Senate Committee on Banking, Insurance, and Other Financial Institutions.
Titled “An Act to amend the Central Bank of Nigeria Act No 7 of 2007,” the proposed legislation was co-sponsored by all 41 members of the Senate Committee on Banking, Insurance, and other financial institutions, and it was introduced on Tuesday, January 30, 2024.
Abiru highlighted that the CBN’s mandate is derived from the 1958 Act of Parliament, with subsequent amendments in 1991, 1993, 1997, 1998, and 2007. He expressed concern that the Act had not been updated for over 16 years despite changes in the Bank’s balance sheet and challenges in monetary policy implementation.
The proposed amendments aim to strengthen the CBN’s ability to maintain monetary and price stability in line with the government’s economic growth goals and align its governance with global best practices. The current Act allows the Governor and Deputy Governors a tenure of five years, renewable for another five years. The new bill suggests a single non-renewable term of six years for both positions.
Senator Abiru emphasized that this approach, common in central banks such as the US Federal Reserve and the European Central Bank, reduces political influence on monetary policy decisions and ensures consistency. Additionally, the bill proposes the establishment of a Coordinating Committee for Monetary and Fiscal Policies to harmonize these policies.
The Committee’s functions include setting internally consistent targets for monetary and fiscal policies to control inflation and promote economic growth. The proposed membership includes the Ministers of Finance, Budget and Economic Planning, Industry Trade and Investment, Agriculture, the CBN Governor, the Chief Economic Adviser to the President, and the Director General of the Securities and Exchange Commission.
Moreover, the bill advocates for the appointment of at least one career staff from within the Bank among the Deputy Governors to ensure a smooth transition and retain institutional knowledge. It also addresses the appointment, qualifications, and tenure of external directors, emphasizing gender inclusivity in the selection process.
The Senate’s decision to pass this bill for second reading reflects its commitment to modernizing the governance framework of the CBN and ensuring effective monetary policy implementation in Nigeria.