Attempts to remove, by administrative procedures, the autonomy and independence, which the Central Bank of Nigeria (CBN) enjoys by virtue of Section 1(3) of its Act of 2007 may have surfaced, after all.
And this is curious at this time when the economy is facing some stress and global attention.
The other day, the Director General, Budget Office of the Federation, Ben Akabueze, was reported to have stated at a Town Hall held in Abuja with chief executives of government-owned enterprises that, budgets of revenue generating agencies of the federal government would soon be captured in the national budget.
Such agencies he mentioned included the Nigerian National Petroleum Corporation (NNPC), Central Bank of Nigeria (CBN) and Federal Inland Revenue Service (FIRS).
adduced reason for the move according to Mr. Akabueze is the need to stop the current practice of sending separate budgets (of the revenue generating agencies/federal government owned enterprises) to the National Assembly for consideration and approval.
Much as it may be desirable to have a consolidated annual national budget presented to the National Assembly in the form the Budget Office of the Federation and of course, the Federal Ministry of Finance that supervises its operations and planning, it behoves the government to exercise caution and restraints in playing with the fate of the economy.
Indeed, the government must be careful in attempting to subject the apex regulatory banking organization in the country, the Central Bank of Nigeria, to such a general administrative requirement and scrutiny.
One apparent way to see this move against the CBN in particular, is that the political leadership is seeking a re-enactment of the discredited past situation when the fiscal and monetary authority resided in only the Federal Ministry of Finance before the CBN gained autonomy as the Monetary Authority, thus leaving the Ministry with authority over the fiscal matters only.
As it is well known, Central Banks all over the world enjoy independence, especially financial. This is because of the unique financial and economic roles they play in any economy.
It is well recognized that central banks’ responsibilities for the stability of prices and exchange rates in an economy have tremendous implications for the health, stability, growth and sustainability of the economy and its diverse economic entities.
A country that subjects these variables to political whims and caprices will definitely have itself to blame. These facts were recognized before the CBN was, years back, weaned from the authority of the Federal Ministry of Finance and formally conferred full independence in section 1(3) of CBN Act, 2007.
It is worth remembering that the CBN used to be under the supervision of the Federal Ministry of Finance (FMF).
That brought about the unhealthy and worrisome situation of having in a single authority the enormous responsibilities of determining and managing both fiscal and monetary policies.
The need to have the determination and management of fiscal and monetary policies separated in order not to jeopardize the well being of the economy and the operating economic entities was the principal justification for that separation.
But CBN’s independence, according to Section I(3) is “in order to facilitate the achievement of its mandate” under CBN Act, 2007 “and the Banks and Other Financial Institutions Act, and in line with the objective of promoting stability and continuity in economic management”.
Some of the main mandates of the Bank include: ensuring monetary and price stability; maintenance of external reserves to safeguard the international value of the legal tender currency; and promoting a sound financial system in Nigeria.
The need for the autonomy of the CBN weighs so much that its Governing Board is, against good corporate governance dictates and principles, being chaired by none other than the Governor who doubles as the Chief Executive.
Ordinarily, such a situation is a serious governance anomaly and a breach. But it is held in this form to completely remove political interference that may result in derailment of the economy.
Besides the foregoing, while Section 5(1) (a) of CBN Act, 2017 provides that “The Bank shall—in respect of each financial year, determine its operating surplus…as approved by the Board”; Section 5(3) provides that, “the balance of the operating surplus shall be paid to the Federal Government half-yearly”. Further, in Section 6 (3) (a) CBN’s Board is charged with the responsibility for “the consideration and approval of the annual budget of the Bank”.
Although it is apparent that banking and economic variables are not in their best status at present but they would have been much worse if CBN had not been independent.
In other words, if both fiscal and monetary policies had been emanating from one source, actual performance of the economy would have been very difficult if not impossible to comprehend.
Surely, if the autonomy of CBN is diluted or indeed, removed entirely, the economy will behold unpalatable developments of unimaginable dimensions.
It is therefore, important that those in political leadership of the country, should understand and appreciate why the CBN, like its counterparts world over, must retain its independence and must be completely insulated as well as protected from arrangements that will subject it’s leadership, policies and operations to political maneuvering, mischief and recklessness.
And so because of its special and unique nature as well as mandates, the CBN should be ‘excused’ from being subjected to general management, administrative, financial and accounting requirements that may affect its autonomy and performance even when other government agencies are amenable to such administrative arrangement.
No doubt, the enabling law of the CBN may need to be periodically re-engineered especially as domestic and international developments necessitate, but a critical area that serious caution and diligence must be exercised during such reviews is the institution’s autonomy/independence.
The justifications for the grant of autonomy to it by the National Assembly should always be put in clear and proper perspective.
Doing otherwise will be sacrificing the institution and all that it is meant to stand for on the altar of mere political exigency. And that will obviously not be in the best interest of the nation and its economy.