Moghalu said that the CBN Act already requires the bank to periodically brief the National Assembly on its operations.
By Jeffrey Agbo
A former deputy governor of the Central Bank of Nigeria (CBN) Prof. Kingsley Moghalu has cautioned the National Assembly against passage of a bill to remove the CBN Governor as Chairman of the bank’s Board of Directors.
In a statement on Thursday, the political economist said such step to remove the power of the board to fix the bank’s budget and set the salaries of its staff was completely wrongheaded and should be dropped.
The bill which seeks to remove the governor of Nigeria’s apex bank as chairman of its board, scaled second reading at the Senate on Wednesday.
The bill, sponsored by Sadiq Suleiman Umar (APC, Kwara North), sought to amend the CBN Act to enable the appointment of a person other than the governor as the chairman of its board.
According to Moghalu, such an amendment to the CBN Act of 2007 will finally destroy the institution by disrobing it completely of its institutional independence as enshrined in the Act.
“It will make the bank, a statutory corporation under the law, to become a Ministry or a mere Agency or Department of the government.
“And it will render the bank an open playground for politicians,” Moghalu said.
According to him, the CBN has already been politicised since mid-2014 when its current governor was appointed.
“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,” he added.
Moghalu said that there are very good reasons why the governor of the bank is the chairman of its board of directors.
He described this as the case in most central banks around the world.
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Moghalu said: “This framework protects central banks from external interference.
“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 APC or PDP or any other party appointed the board chairman of the CBN.
“Well, some will 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.”
According to Moghalu, 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,” he added.
Moghalu said that it was right that the CBN be accountable, “but let’s not throw the baby away with the bath water.”
He said that the CBN Act already requires the bank to periodically brief the National Assembly on its operations.
According to him, 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, the unique nature of which requires its independence to work effectively for the government and citizens,” Moghalu said.