MARY EYO
Stakeholders in Nigeria’s capital market have voiced strong concerns regarding proposed amendments to the Central Bank of Nigeria (CBN) Act No. 7 of 2007, warning of potential negative economic repercussions.
In a corporate filing with the Nigerian Exchange (NGX) on Tuesday, the Chartered Institute of Stockbrokers (CIS) and the Association of Securities Dealing Houses of Nigeria (ASHON) expressed fears that the bill could undermine the CBN’s independence.
The legislation, which has passed its second reading and is set for a public hearing on May 30th, aims to modify the CBN’s autonomy by requiring National Assembly approval for its budget and establishing a new coordinating committee for monetary and fiscal policies.
Critics argue that these changes could introduce political interference in monetary policy decisions, impairing the central bank’s ability to manage the economy effectively and impartially.
“Safeguarding the independence of the Central Bank of Nigeria is crucial for aligning with global economic best practices and ensuring decisions are driven by sound financial principles, free from undue influence,” stated Oluropo Dada, President and Chairman of the Council of CIS.
Sam Onukwue, Chairman of ASHON, echoed these sentiments, highlighting the potential impact on investor confidence. “An independent central bank is a cornerstone for maintaining the country’s standing in the global financial community, which directly affects investor confidence, credit ratings, and the overall economic outlook,” Onukwue noted.
Both organizations acknowledged the merit of some proposed amendments aimed at enhancing corporate governance and compliance but stressed the importance of considering the broader ramifications.
“It is imperative to ensure that fiscal authorities do not encroach upon the central bank’s operational independence, as this is vital for effective and timely monetary policy responses,” Dada emphasized.
As the public hearing approaches, financial market participants, economists, and analysts are closely monitoring the proceedings and subsequent legislative actions.
“The outcome will have far-reaching implications for Nigeria’s economic policy framework and its position in the global economic landscape,” Onukwue concluded.