By Demola Akinyemi, Ilorin

A non-governmental organisation, Foundation for Peace Professionals (PeacePro), has urged the Central Bank of Nigeria (CBN) to urgently assess the possibility of acquiring shareholding membership in the Bank for International Settlements (BIS).

The organisation said such a move could strengthen Nigeria’s monetary and financial institutions and potentially generate significant economic value over the next decade.

The BIS is owned by 63 central banks and monetary authorities whose economies collectively account for about 95 per cent of global GDP. Its shareholder members have voting and representation rights at its General Meetings.

Executive Director of PeacePro, Abdulrazaq Hamzat, who initiated the proposal as part of the organisation’s advocacy for stronger economic and financial institutions, said Nigeria could potentially generate up to $20 billion in cumulative economic value over 10 years through improved reserve management, foreign exchange risk management, financial sector resilience, monetary policy capacity and institutional influence.

Hamzat, in a statement made available to journalists in Ilorin, however, clarified that the $20 billion estimate did not represent funds that would be paid to Nigeria by the BIS.

He said the figure was an estimate of the potential economic value that could arise from improved management of the country’s financial assets and monetary system.

“The BIS will not give Nigeria $20 billion. That is not the argument. The argument is that Nigeria could potentially create up to $20 billion in economic value over a decade by improving the way we manage the assets, currency and financial system we already have,” he said.

Hamzat urged the CBN to assess the proposal beyond the immediate cost of acquiring shares or the dividends that could accrue from the investment.

“If we reduce BIS membership to the question of dividend, we have completely missed the point. The real value is institutional. It is about what happens to Nigeria’s reserves, currency and financial system when our central bank is more deeply integrated into the world’s leading network of central banks,” he said.

Reserve management

According to him, reserve management is one of the areas where Nigeria could derive immediate benefits from deeper engagement with the BIS.

He said marginal improvements in risk-adjusted returns, liquidity management and asset allocation could translate into substantial savings and additional value when applied to Nigeria’s external reserves.

“When you are managing tens of billions of dollars in reserves, a small improvement in risk-adjusted returns, liquidity management or asset allocation can be worth hundreds of millions of dollars,” Hamzat said.

He, however, stressed that reserve management should continue to prioritise safety, liquidity and returns, rather than excessive risk-taking in pursuit of higher yields.

On foreign exchange management, Hamzat said Nigeria remained exposed to global interest rates, commodity prices, capital flows and movements in the US dollar, making stronger institutional capacity necessary.

“The naira does not operate in isolation. Every major movement in the dollar, oil prices, US interest rates or international capital flows eventually affects Nigeria. We need a central bank that is institutionally equipped to anticipate and manage those shocks,” he said.

Financial stability

Hamzat also said closer engagement with the BIS could enhance the resilience of Nigeria’s financial sector.

He noted that the BIS supports major global financial standard-setting mechanisms, including the Basel Committee on Banking Supervision.

“The cheapest financial crisis is the one prevented. When a banking or currency crisis occurs, the losses spread to businesses, households, government revenue, employment, investment and economic growth,” he said.

According to him, stronger financial stability monitoring, risk management and crisis preparedness could generate significant economic value even without directly increasing government revenue.

He also linked stronger central bank capacity to improved monetary policy and economic planning, noting that monetary policy decisions affect investment, credit, production, employment, exchange rates and government revenue.

He said Nigeria could benefit from greater exposure to international cooperation among central banks on inflation, financial stability, capital flows, payment systems and digital finance.

Hamzat also pointed to the BIS’s work on the future of cross-border payments, including Project Agorá, which is examining the use of tokenised central bank reserves and commercial bank deposits in wholesale cross-border transactions.

Call for independent assessment

Hamzat stressed that the $20 billion estimate should not be treated as a definitive policy projection until it had undergone rigorous and independent economic modelling.

“If the independent assessment produces $20 billion, excellent; if it produces $10 billion, it is still potentially a compelling investment. If it produces $5 billion, the question remains whether the strategic benefits justify the cost. What Nigeria cannot afford to do is dismiss the opportunity without studying it,” he said.

He proposed the establishment of a CBN-led Nigeria-BIS Strategic Assessment Team comprising experts in monetary economics, international finance, reserve management, banking regulation, foreign exchange markets, financial technology and economic planning.

The team, he said, should evaluate the cost of potential membership against possible gains in reserve management, financial stability, monetary policy, foreign exchange management, institutional influence and regional financial integration.

West African representation

Hamzat said potential Nigerian membership of the BIS could also have implications for the wider West African region.

He noted that although the BIS has 63 shareholder central banks and monetary authorities, no West African central bank is currently among its shareholders, while African shareholder members include Algeria, Morocco and South Africa.

“West Africa has hundreds of millions of people and a major regional economy, yet the region has no shareholder seat at the BIS. That should concern us,” he said.

He urged the CBN to engage regional institutions, including the West African Monetary Institute (WAMI), West African Monetary Agency (WAMA), Banque Centrale des Etats de l’Afrique de l’Ouest (BCEAO) and West African Institute for Financial and Economic Management (WAIFEM), to explore how Nigeria’s potential membership could strengthen the region’s representation in global monetary governance.

“We should not only be the biggest economy in West Africa; we should also be one of the countries shaping the financial architecture of the region,” he said.

Hamzat argued that Nigeria’s economic size and systemic importance presented an opportunity for the country to translate its economic weight into greater institutional influence.

“Nigeria cannot continue to complain about the rules of global finance while remaining absent from important rooms where the future of global finance is discussed,” he said.

He said developments in digital finance, tokenisation, cross-border payments and emerging systemic risks made stronger cooperation among central banks increasingly important.

“The world is moving rapidly towards a new monetary and financial architecture. Nigeria cannot afford to watch these developments from the gallery,” he said.

Hamzat urged the CBN Governor, Olayemi Cardoso, to initiate formal consultations with the BIS and commission a comprehensive cost-benefit assessment of potential Nigerian shareholding.

He said the findings should be presented to the Federal Government and other relevant economic policy institutions.

“Economic stability is built before a crisis, not during one. Nigeria should invest in the institutions that help us anticipate shocks, manage them and recover faster,” he said.

Hamzat said the proposal should be given serious consideration as part of efforts to strengthen Nigeria’s monetary institutions and increase the country’s influence in global financial governance.

“The $20 billion is a proposition that deserves to be tested, not dismissed. Nigeria needs stronger monetary institutions. West Africa needs a voice. And the CBN should seriously consider whether BIS shareholding can become part of the strategy for building a more stable, resilient and globally competitive Nigerian economy,” he said.