Capital Market Stakeholders Warn Against Proposed CBN Act Amendment

By Aduragbemi Omiyale

Some critical stakeholders in the capital market have expressed serious concerns over the proposed amendments to the Central Bank of Nigeria (CBN) Act No. 7 of 2007.

According to the Chartered Institute of Stockbrokers (CIS) and the Association of Securities Dealing Houses of Nigeria (ASHON), the action could have adverse economic consequences.

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.

The President and Chairman of the Council of CIS, Mr Oluropo Dada, emphasised the pivotal role of the central bank 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,” Mr Dada stated.

“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,” he added.

On his part, the Chairman of ASHON, Mr Sam Onukwue, highlighted 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,” Mr Onukwue cautioned.

The legislation, which has passed its second reading and is scheduled for a public hearing on May 30, 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.

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.