The former Minister of Finance Dr Shamsuddeen Usman has urged African
Central Bank Governors to maintain a high level of integrity and
transparency as a means of ensuring that the much-touted autonomy of
the apex banking institution earns the confidence of the people and
achieves the desired goal of long-term, non-inflationary growth.
Usman who stated this in a presentation on Central Bank Independence
he made at the just-ended meeting of the Association of African
Central Bank Governors in Malabo Equatorial Guinea also noted that
there is increasing call for Central Bankers to show greater
accountability in the conduct of monetary and financial regulatory
policies.
Dr Usman who was also a former Minister of National Planning as well
as former Deputy Governor of the Central Bank of Nigeria (CBN) further
pointed out that Central Banks cannot achieve their goals and control
inflation if their integrity is in doubt and people lack confidence
in the their policies.
He said further: “As the tenure of the Governors of Central Banks is
usually longer than those of their political mentors or tormentors, it
is this combination of integrity and public confidence that will
establish and sustain the legacy of the Central Bank Governors.”
The former Minister also affirmed that there “is considerable evidence
of a positive relationship between Central Bank independence and the
achievement of the key objective of monetary policy, which is
achieving long-run, non-inflationary growth.” He however noted that
the strength of the correlation is affected by the legal,
institutional and political contexts of particular countries.
According to him: “controversy over Central Bank independence has been
a long one, as evidenced by the nationalization of the Bank of England
by the Labour government, immediately after the 2nd World War.”
He observed further that the debate over Central Bank independence
usually gathered so much heat in periods of economic and financial
crises.
“Central Bankers therefore, in spite of their increasingly de jure
independence, will face challenges to their independence and limits on
what they can do and achieve, especially in periods of economic and
financial crises.”
Looking at the Nigerian case study, Usman noted that certain actions
taken by the Central Bank of Nigeria, under the immediate past
Governor of the last Central Bank Governor, Sanusi Lamido Sanusi
(SLS)SLS generated considerable amount of controversy, even as the
CBN, on its part, “pointed to its relative success in fighting
inflation over the period and insisted that all the actions it took
were not only in the wider public interest, but also within its limits
of authority.”
He however pointed out that the suspension of Sanusi a few weeks
before his term was to expire, was the first time that a Central Bank
Governor would be removed before the end of his appointed statutory
term.
“Without prejudice, however, it is important to point out that,
whatever the merits of the case, the removal represents a critical
drawback in the process of institutions building. The Central Bank,
until then, had been one institution, the sanctity of which had been
left relatively intact, even under military regimes.”
