As far as my memory can recall, the idea of stripping the Central Bank of Nigeria, CBN, of the autonomy and independence it currently enjoys, gained momentum after its governor, Sanusi Lamido Sanusi, accused the lawmakers of expending 25 per cent of the country’s budget on themselves. The accusation was based on information obtained from the budget office in the ministry of finance. The former CBN governor, Charles Soludo, hinted at this at a dinner recently when he called for “constructive dialogue” in order to “avoid going to the other extreme as the institution of the CBN must be preserved no matter the level of disagreement” Today, CBN’s autonomy is once again a subject of scrutiny at the Senate. The nation’s highest decision making body seeks to change the Act that gave so much administrative autonomy to the apex bank. As someone in the know and as alluded to by Soludo, if the amendment being sought is not about this “level of disagreement” and the well publicised altercation between the senators and the CBN governor, what is it about?
Among other things the proposed bill seeks to disqualify the CBN governor from being chairman of the bank’s board and also bar his deputies and directors from being members too. The CBN has an open budget; its activities are not subjected to checks and balances. Its remuneration, according to industry watchers is shrouded in secrecy, but it is about the highest in the country. It is arbitrarily and unilaterally fixed.
However, until the lawmakers convince us otherwise—and we do need to be educated on the propriety of their actions—these are not tenable reasons for them to dissipate energy and waste resources on a new bill for the CBN just a few years after the “lease of life” brought about by democracy. Independence for central banks is a global practice and those who have not achieved it are working towards it. So, why is it that each time we take a step forward, we take two more backward? And what is the use of diluting the powers of the CBN board, as it is being proposed, only to transfer the same autonomy to a few other Nigerians, most likely, the
Senate and Reps’ committees on CBN, board members who, most likely are PDP stalwarts known for imposing their whims; while seeking for financial inducements, to the detriment of the organisations they oversight in the case of the lawmakers.
Monetary policy should not be subjected to political whims and it should not be a quick fix thing. Legislation should not be personalised, in this case, because of the guts of one recalcitrant CBN governor. It is a wrong-headed approach to want to clip CBN’s wings because of Sanusi or so it seems. There should be policy consistency. Lack of it is the bane of the country’s development.
We need laws to fortify anti-corruption agencies like ICPC and EFCC. Instead of whittling down the autonomy of the CBN, more institutions and agencies of government should actually be reinforced to work effectively. Imagine an EFCC and ICPC free of presidency’s meddlesomeness and other political interferences, which are at best cogs in the wheel of the drive for a corruption-free country of our dream.
Why is it that after 13 years of democracy, corruption is entrenched now more than ever? The obvious answer is that agencies of government are not allowed to operate freely; they are hampered and held down by frivolous political claims.
Rather, we should seek to enhance relationships among these institutions of government, for them to complement one another to ensure accountability and transparency, which invariably should accompany independence.
At this juncture, it is germane to ask: how will the change in CBN’s status benefit the common man and the economy? To answer these questions correctly, we need the expertise of the professionals, and they have been speaking. According IMF’s country chief, Scott Rogers,
the move can lead to economic doom. “The IMF has always advocated for strong, independent central banks. That provides them with the autonomy to depoliticize their policy actions. Without a strong independent central bank, you do not have an independent monetary policy; everything becomes dependent upon the budget alone”. And as we all know, the budget is one instrument that we have not got right. It is fluid and seen as a mere paper work and nothing more An independent central bank guarantees sound and stable financial system in the long run. Charles Soludo also remarked that the “survival of that institution (CBN) is at the heart of the survival of the Nigerian economy”.
Finally, it is apt to ask if other central banks of countries of the world are ‘legislated’ on frequently as the mood dictates. If not, why should we? Or are we no longer part of the global community? Legislations in themselves do not make things happen; it is the operators of the system that make things work.
The Chairman of Federal Reserve, America’s central bank, Ben S. Bernanke in 2010 spoke on central banks’ independence, transparency and accountability at the Institute for Monetary and Economic Studies International Conference, Bank of Japan, Tokyo, Japan. He said “political interference in monetary policy can generate undesirable boom-bust cycles that ultimately lead to both a less stable economy and higher inflation” He advocated for “credible” central banks that must be “accountable to the public for its actions in order for its independence to be “democratically legitimate”, while governments continue to set goals and policy, because, as noted elsewhere, independence reposes confidence.
On the need for the CBN to be “accountable and responsive to the public and its elected representatives”, Sanusi must come down from his high horse and explain policy matters to these representatives. Talking down lawmakers is not political correctness; it can at best whip up public sentiment against them, and Sanusi seen as a non-conformist who tells truth to power. But the result of these emotional outbursts may not be too palatable for the CBN itself and the nation as a whole.
Again, we can borrow a leaf from the US. The Federal Reserve according Bernanke gives frequent speeches and testimonies before the Congress on the economic situation, submits an extensive report to the Congress twice each year on the economy and monetary policy, and its monetary policymaking arm releases a statement after each of its meetings that explains the Committee’s policy decision among other collaborative efforts.
This is what the CBN should do to break down barriers and create understanding between it and the lawmakers. If the CBN is not already doing something in this direction, it is not too late to start. If the proposed legislation is desirable, it should not be about Sanusi. It should be about the sustainability of government’s monetary policy and the survival of the country.