Reps move to regulate CBN operations

The House of Representatives on Thursday took initial legislative steps to strengthen transparency and accountability in the operations of the Central Bank of Nigeria, following the second reading of a bill seeking comprehensive amendments to the Central Bank of Nigeria Act, 1991.

The proposed legislation, co-sponsored by the House Leader, Prof Julius Ihonvbere, and Lagos lawmaker, Jesse Onakalausi, received unanimous support during plenary.

Titled “A Bill for an Act to Amend the Central Bank of Nigeria Act, 1991, to allow for proper day-to-day operations, professional oversight and enhance checks and balances, and for other matters connected thereto, 2025,” the bill responds to mounting concerns about gaps in governance and oversight at the apex bank—issues that gained national prominence following recent controversies surrounding monetary policy decisions, foreign exchange management, and the 2022 currency redesign.

Nigeria’s central banking framework has long been criticised for its weak corporate governance structure, particularly the concentration of operational and oversight powers in the office of the CBN Governor.

This fusion, analysts argue, contributed to years of opacity in policy formulation, excessive discretion in foreign exchange administration, and insufficient checks on fiscal financing through Ways and Means advances. These concerns set the backdrop for the latest legislative push.

Explaining the rationale behind the bill, Onakalausi said it arose from an urgent need to reinforce governance, autonomy, transparency, and accountability within the apex bank, “In light of recent national and global economic realities.”

Addressing lawmakers on the general principles of the proposed amendments, he emphasised the overarching responsibility of the central bank, noting that, “The CBN plays a central role in stabilising the financial system, ensuring monetary credibility, safeguarding price stability, and promoting public confidence in the Nigerian economy.”

However, he observed that recent developments have exposed deep-seated weaknesses. According to him, “Developments in recent years – ranging from governance concerns, foreign exchange distortions, monetary policy inconsistency, weak oversight mechanisms, to the challenges witnessed around currency redesign and policy communication – have exposed structural gaps in the principal Act.”

A key objective of the bill, Onakalausi said, is restoring sound corporate governance. He argued that in most jurisdictions, the Governor manages day-to-day operations while the Board provides oversight—an arrangement that ensures institutional balance.

While stressing that “Both roles are meant to be separate to avoid conflict of interest,” he noted that “The current CBN Act merges the positions of Governor and Board Chairman, creating an avoidable concentration of power. This bill separates these roles to ensure professional oversight without interference in day-to-day operations.”

Onakalausi added that the bill seeks to strengthen monetary policy independence and bring Nigeria’s regulatory architecture in line with global standards. “This bill restructures the MPC to improve expertise, independence, and transparency, aligning Nigeria with best practices seen in economies such as the United Kingdom, South Africa, the European Union, and Brazil.”

He also highlighted concerns over the historic misuse of Ways and Means financing. “It prevents fiscal abuse as Section 38 (Ways and Means Advances) has historically been one of the most abused provisions under the CBN Act.

“This bill introduces a clear limit – 10% of the previous year’s actual revenue – to prevent inflationary financing of government deficits and ensure fiscal responsibility,” he said.

Additional provisions of the bill focus on safeguarding the naira and improving transparency in foreign exchange management.  It also introduces “A 90-day notice, impact assessments, mandatory National Assembly briefing before major monetary actions like redesign or demonetisation,” ensuring that sudden policy shocks are avoided.

While acknowledging the need for central bank autonomy, Onakalausi maintained that such independence must be accompanied by strong oversight mechanisms.

The bill proposes new reporting standards that will require the apex bank to submit its annual audited accounts within two months, provide quarterly reports on monetary policy decisions, and maintain a publicly accessible website containing all its publications.

Other key amendments include revising Section 6 to read: “A professional Chairman separate from the Governor, experienced in economics, banking, finance, or public financial institutions.” Section 8 is also amended to state: “Governor and Deputy Governors to serve a single six-year term.”

To promote continuity and reduce political interference, the draft legislation provides that “Two Deputy Governors must be drawn from internal Directors for institutional continuity.”

The reconstituted Monetary Policy Committee will consist of the Governor, four Deputy Governors, two board members, and four external experts who, according to the bill, “Must be independent and cannot hold public office.”

If passed, the bill would mark one of the most far-reaching reforms of the CBN Act since its enactment, with implications for governance, monetary policy, and the broader financial system.