Stakeholders in the capital market have voiced reservations about the proposed amendments to the Central Bank of Nigeria (CBN) Act No. 7 of 2007, warning of potential adverse economic consequences.
In a statement signed by Joseph Kadiri, Team Lead, Public Relations and Internal Engagement, Group Communications and Partnerships of the NGX on Tuesday, the Chartered Institute of Stockbrokers (CIS) and the Association of Securities Dealing Houses of Nigeria (ASHON) expressed concerns that the bill could undermine the independence of the CBN.
The legislation, which has passed its second reading and is scheduled for a public hearing on May 30th, seeks to modify the CBN’s autonomy by subjecting its budget to National Assembly approval and establishing a new coordinating committee for monetary and fiscal policies.
Critics argue that these changes could introduce political interference in monetary policy decisions, hampering the central bank’s ability to manage the economy effectively and objectively.
The President and Chairman of the Council of CIS, Oluropo Dada, emphasized the pivotal role of the CBN in maintaining economic stability and preserving international credibility.
“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,” Dada stated.
He said, “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.”
While both organizations acknowledged the merit of some proposed amendments aimed at enhancing corporate governance and compliance, they 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 will closely monitor 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.”