Senate Passes Bill to Amend CBN Act: Key Changes and Implications

The Senate on Tuesday passed for second reading, a bill seeking to amend the Central Bank of Nigeria (CBN) Act 2007.

The proposed changes include a single non-renewable six-year term for the Governor and Deputy Governors of the apex bank.

The bill, co-sponsored by 41 members of the Senate Committee on Banking, Insurance and other Financial Institutions, aims to align the Bank’s governance mechanisms with global best practices.

The current Act, which has not been amended for over 16 years, has faced challenges in monetary policy implementation due to fiscal dominance and a rapidly changing financial landscape.

Key changes proposed in the bill include:

A single non-renewable six-year term for the Governor and Deputy Governors of the Central Bank of Nigeria.

The appointment of an Acting Governor in case of vacancy, ensuring a smooth transition process and minimizing the risk of loss of institutional memory.

The inclusion of gender in the factors considered by the President when appointing external directors.
Limiting temporary advances to the federal government and empowering the CBN to grant temporary advances to finance unexpected budget shortfalls.

A one-year non-renewable term for external directors and a requirement to have at least one career staff as Deputy Governor.

The establishment of a Chief Compliance Officer for the Bank.

These proposed amendments are aimed at strengthening the Central Bank of Nigeria to better support the government’s economic growth objectives and to align its governance mechanisms with global best practices.

The bill also introduces a Coordinating Committee for Monetary and Fiscal Policies to ensure coordination between monetary, fiscal, and trade policies, with the goal of controlling inflation and promoting sustainable economic growth.

As the bill progresses through the legislative process, it will be important to monitor its impact on the Central Bank of Nigeria’s operations and its ability to effectively implement monetary policy in support of the government’s economic goals.