Governor of Central Bank of Nigeria (CBN),  Mallam Sanusi Lamido Sanusi, yesterday launched a  campaign against the CBN Amendment Act 2012 currently before the Senate.

The  bill seeks  to  amend the CBN  Act and make provisions that would compel the apex bank to submit its annual budget to the National Assembly  for scrutiny.

But Sanusi argued that such a legislation will subject the CBN to some undue  political interferences.

Sanusi was joined by  a former CBN Governor, Mallam Adamu Ciroma, and a  former Executive Director of the CBN, Professor Green Nwankwo.

Others who also opposed the bill were the Nigeria Labour Congress(NLC) and the South-South/ South-East Professionals.

In a presentation at a public hearing on the bill,Sanusi  told the Senate Joint Committee on Judiciary, Banking,
Insurance and other Financial Institutions  that the proposed amendment to the legislation  was undesirable and against global best practices.

According to Sanusi, the move to compel the CBN to subject its budget to parliamentary scrutiny would not only  put CBN at the mercy of politicians but would remove its  autonomy  and compromise its authority to regulate  fiscal and monetary policies in the economy.

He gave instances of about  40 countries where, he claimed,  their apex  banks do submit annual budgets to the parliaments.

Sanusi said that the only place where the central bank has been compelled to dance to the tune of the parliament was Zimbabwe, adding that the repercussion of such a law has clearly manifested in the poor health of the Zimbabwean economy.

“The global trend for efficient and effective central banking is a truly independent central bank with both operational and financial independence.

The benefit  of a strong independent central bank is  the ability of the bank to operate on a long term time scale than politicians and therefore do not face the same temptation to relax policy to achieve short term popular objectives such as low interest rates.

A central bank would be operating under imminent danger if it depends on government for funding or waits for government or legislative approval for its financial needs. The very prompt intervention of the CBN in the recent banking crisis in Nigeria best illustrates this point.

“The question is of all the functions of CBN, why should it be budgetary independence? There is not a single Central Bank in the world that the budget goes to parliament for approval.

“What is so special about the CBN that its own budget, out of all the Central Bank in the world has to come to parliament? The lack of budgetary independence can potentially be used to undermine the whole function of the Central Bank.

If the Central Bank needs the approval of political authorities before it gets its budget, those authorities can compel the bank to act in a manner that befits what it seeks it should do.

“I think it is important that when we talk about legislation in central banking to benchmark the CBN and see whether we are benchmarking against 39 or against the central bank of Zimbabwe and then look at  that economy and currency of that country.

“Today, because of the autonomy of CBN, there is a distinction between the assets of the CBN and assets of Federal Government, which means for example, all those court cases in which injunctions were received on the funds of the Federal Government, nobody can have access to the assets of Nigeria because they are Central Bank assets but once the CBN loses financial autonomy, those assets are government assets.

Let us know that there are other implications of this, if we can find a way of meeting your requirements for having feasibility of what you want and we, having independence, that will be alright but we should not insist on amendment that has consequences on our economy,” Sanusi said.

The CBN  boss  also debunked insinuations  that the  budget of the  CBN was not subjected to any scrutiny.

He explained  that the apex bank submits its annual budget to its board of directors for approval  while the approved budget is subsequently submitted  to the Budget Office of the Federation.
In addition to this, Sanusi  disclosed,  three audit firms appointed by the President also audits  the annual accounts of the CBN.

He disclosed that the current practice in Nigeria was also obtainable at the  Federal Reserve Bank of United States, the Bank of England, Reserve Bank of South Africa, and the Central Bank of Ghana amongst others.

In a separate presentation, former Governor of the CBN, Mallam Adamu  Ciroma  urged the National Assembly to  leave  the CBN alone and avoid any legislation that could expose the apex bank to political interferences.

Ciroma said that the proposed law has the potentials of  eroding  the powers of the apex  bank to take decisive actions  in crisis situations.

“Let us not bring a policy that will open the system to things that we cannot predict.

“They (board of Directors of CBN) are made up of people with knowledge and integrity. Why do you want to do something different?  What is important is ensuring that the right thing is done and that there is trust in the internal monetary system. We should not unnecessarily tamper with what is working,” Ciroma admonished.

Vice President, Nigeria Labour Congress,  Mr. Isa Aremu, also presented a similar argument  on t he bill.

Aremu said that independence of the CBN should be protected like the autonomy of the central labour union.
Earlier at the public hearing,  Senate President, David Mark, explained that the bill  was not meant to erode  the independence of CBN but to  ensure that the bank was made to operate in line with global best practices.

Mark represented by Senate Leader, Victor Ndoma Egba, said that the Senate had no preconceived position on the bill and would want all stakeholders to make inputs in order to enrich the legislation.

Source: Thisday/Onwuka Nzeshi