Bill to limit tenure of CBN Gov, deputies to non-renewable six years passes second reading at Senate
A bill seeking to limit the tenure of governor and deputy governors of the Central Bank of Nigeria (CBN) to a single non-renewal term of six years has passed a second reading at the Senate.
The bill was sponsored by the senator representing Lagos East, Adetokunbo Abiru.
Section 8 (2) of the CBN Act 2007 empowers governors and deputy governors of the bank to stay five years in office and they are also eligible for re-appointment for another term not exceeding five years.
The amendment bill was read the second time at the Senate on Tuesday and was referred to the Committee on Banking Finance and Other Financial Institutions for further legislative action.
The Senate President, Godswill Akpabio, directed the committee to revert to the Senate within two weeks.
Other proposed amendments
The bill also proposed that where a vacancy is created as a result of the death or resignation of a CBN governor or deputy governor, the president of the federation can appoint an acting governor in the interim pending the appointment of a substantive governor or deputy governor.
It also proposed that where a substantive appointment is made, such appointment will be for a fresh term rather than serving the tenure of the previous governor or deputy governor.
Mr Abiru, while leading the debate on the bill, argued that practical evidence has shown that a single non-renewal term for governors and deputies of the CBN will help to reduce political influence on monetary policy decisions.
“Empirical evidence shows that a single term for the members of the Executive and Board members of central banks helps to reduce political influence on monetary policy decisions and the time inconsistency problem associated with non-independent central banks.
“This is the practice adopted by many independent Banks such as the US Federal Reserve and the European Central Bank where their chief executive officers serve only one non-renewable term” he argued.
Mr Abiru, who is the Chairman of the Senate Committee on Banking Finance and other Financial Institutions, also said the bill seeks to empower career staffers of the CBN to be elevated to the position of deputy governors.
The senator noted that the bill will also empower the federal government to appoint at least one female among the external directors of the country’s monetary policy committee.
He proposed that five external directors of the CBN should hold office for a non-renewable term of five years.
The bill also proposed the establishment of the office of a Chief Compliance Officer for the Bank, of the rank of a deputy governor, who reports directly to the Board and may occasionally be summoned to appear before the relevant committee of the National Assembly.
Mr Abiru explained that the primary role of the Chief Compliance Officer is to ensure that the bank complies with all the public accountability and transparency requirements contained in the extant laws under which the bank operates.
Ways and Means advances
The bill also proposed that the federal government must refund the Ways and Means loan obtained from the CBN within three months from the date it is made available.
Mr Abiru said the current provision which stipulates that the federal government repays the loan before the end of the fiscal year is prone to abuse as it creates a window for the government to obtain overdrafts from the bank in January and wait until December to make repayment.
Issuance of New Legal Tender
The bill proposed that before the apex bank can replace an old legal tender with a new one under any restructuring, redesigning, redenomination or any similar arrangement,
– It should give reasonable notice of at least one year of its intention to replace the existing legal tender
-The entire programme should last at least two years from the date of the announcement of its intention
-Throughout the duration of the programme, both the old and new currency notes and coins are expected to serve as legal tender simultaneously.
READ ALSO: FX Backlog: CBN pays out $400mn to settle genuine requests
-The withdrawal of the old legal tender should be carried out in phases and in a manner that does not cause any distortion to economic activities.
-The Bank should be in possession of sufficient new currency (not less than 70 per cent of the old stock of currency to be withdrawn) before embarking on such a programme.
During the debate, the majority of the senators spoke in support of the proposal that the tenure of the governor and deputy governors of the CBN should be a non-renewable six-year term.
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A bill seeking to limit the tenure of governor and deputy governors of the Central Bank of Nigeria (CBN) to a single non-renewal term of six years has passed a second reading at the Senate.
The bill was sponsored by the senator representing Lagos East, Adetokunbo Abiru.
Section 8 (2) of the CBN Act 2007 empowers governors and deputy governors of the bank to stay five years in office and they are also eligible for re-appointment for another term not exceeding five years.
The amendment bill was read the second time at the Senate on Tuesday and was referred to the Committee on Banking Finance and Other Financial Institutions for further legislative action.
The Senate President, Godswill Akpabio, directed the committee to revert to the Senate within two weeks.
Other proposed amendments
The bill also proposed that where a vacancy is created as a result of the death or resignation of a CBN governor or deputy governor, the president of the federation can appoint an acting governor in the interim pending the appointment of a substantive governor or deputy governor.
It also proposed that where a substantive appointment is made, such appointment will be for a fresh term rather than serving the tenure of the previous governor or deputy governor.
Mr Abiru, while leading the debate on the bill, argued that practical evidence has shown that a single non-renewal term for governors and deputies of the CBN will help to reduce political influence on monetary policy decisions.
“Empirical evidence shows that a single term for the members of the Executive and Board members of central banks helps to reduce political influence on monetary policy decisions and the time inconsistency problem associated with non-independent central banks.
“This is the practice adopted by many independent Banks such as the US Federal Reserve and the European Central Bank where their chief executive officers serve only one non-renewable term” he argued.
Mr Abiru, who is the Chairman of the Senate Committee on Banking Finance and other Financial Institutions, also said the bill seeks to empower career staffers of the CBN to be elevated to the position of deputy governors.
The senator noted that the bill will also empower the federal government to appoint at least one female among the external directors of the country’s monetary policy committee.
He proposed that five external directors of the CBN should hold office for a non-renewable term of five years.
The bill also proposed the establishment of the office of a Chief Compliance Officer for the Bank, of the rank of a deputy governor, who reports directly to the Board and may occasionally be summoned to appear before the relevant committee of the National Assembly.
Mr Abiru explained that the primary role of the Chief Compliance Officer is to ensure that the bank complies with all the public accountability and transparency requirements contained in the extant laws under which the bank operates.
Ways and Means advances
The bill also proposed that the federal government must refund the Ways and Means loan obtained from the CBN within three months from the date it is made available.
Mr Abiru said the current provision which stipulates that the federal government repays the loan before the end of the fiscal year is prone to abuse as it creates a window for the government to obtain overdrafts from the bank in January and wait until December to make repayment.
Issuance of New Legal Tender
The bill proposed that before the apex bank can replace an old legal tender with a new one under any restructuring, redesigning, redenomination or any similar arrangement,
– It should give reasonable notice of at least one year of its intention to replace the existing legal tender
-The entire programme should last at least two years from the date of the announcement of its intention
-Throughout the duration of the programme, both the old and new currency notes and coins are expected to serve as legal tender simultaneously.
READ ALSO: FX Backlog: CBN pays out $400mn to settle genuine requests
-The withdrawal of the old legal tender should be carried out in phases and in a manner that does not cause any distortion to economic activities.
-The Bank should be in possession of sufficient new currency (not less than 70 per cent of the old stock of currency to be withdrawn) before embarking on such a programme.
During the debate, the majority of the senators spoke in support of the proposal that the tenure of the governor and deputy governors of the CBN should be a non-renewable six-year term.
Support PREMIUM TIMES’ journalism of integrity and credibility
Good journalism costs a lot of money. Yet only good journalism can ensure the possibility of a good society, an accountable democracy, and a transparent government.
For continued free access to the best investigative journalism in the country we ask you to consider making a modest support to this noble endeavour.
By contributing to PREMIUM TIMES, you are helping to sustain a journalism of relevance and ensuring it remains free and available to all.
Donate
TEXT AD: Call Willie – +2348098788999
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