By Henry Umoru & Inalegwu Shaibu
ABUJA — Central Bank of Nigeria, CBN,  Governor, Mallam Sanusi Lamido Sanusi; former governor of the bank, Dr. Adamu Ciroma and the Nigeria Labour Congress, NLC, have rejected a proposed law by the Senate to compel the apex bank to submit its annual budget to the National Assembly for approval.

Sanusi told the Senate Joint Committee on Banking, Insurance and other Financial Institutions, and Judiciary that the amendment to the CBN 2007 Act was undesirable and against global best practices as it sought to put CBN at the mercy of politicians who were capable of using the bank to score cheap political points.

Sanusi who was joined by Ciroma, NLC and other financial experts at a one-day public hearing on “Central Bank Amendment Bill 2012” said the proposed law would remove the autonomy of CBN and compromise the apex bank in monetary policy formulations.

He listed 40 countries where their central banks do not submit annual budgets to parliaments for approval except Zimbabwe, adding that the economic situations of Zimbabwe do not encourage any kind of emulation.

The governor also cleared the misconception that nobody approves budget of CBN, maintaining that the apex bank submits its annual approved budget by its Board of Directors to the Budget Office of the Federation.

According to him, “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.

“Now the interest rate is too high, we have to keep it high because we have to check inflation. Now, if the budget was under the control of political authorities, it is very easy, they will say fine, you have the interest rate, we will see when you come for your budget. And maybe because we need the approval of budget, we go and compromise on that.”

He referred to the Federal Reserve Bank of United States, the Bank of England, Reserve Bank of South Africa, and the Central Bank of Ghana among others as banks that have the budgets approved by the Board of Directors.

According to him, “in each of these Central Banks apart from one, the budget is approved by the board; the annual account is approved by the board. The one Central Bank in which the budget is prepared by the board and approved by the minister is the central bank of Zimbabwe.

“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 that economy and currency of that country.”

Nobody should interfere with CBN — Ciroma

Ciroma in his presentation to the committee said the CBN should be left to operate without political interference, adding that political interference will erode the powers of the bank especially in crisis situations.

He said: “Unless you can deal with the economy and monitory policy right when things go wrong with the CBN, I don’t know where the country will be. 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, leave the CBN well alone. 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.”

Amendment may affect economy adversely—NLC

The NLC in its presentation described the bill as retrogressive, saying the amendment may affect the economy adversely.

Vice President of the NLC, Mr. Isa Aremu, urged the Senate to drop amendment to CBN 2007 Act, saying: “We must have the independence of the judiciary, we must have the independence of the CBN, and we need the independence of the labour movement. We support that the CBN should be autonomous without eroding the powers of the National Assembly to do a rigorous oversight.”

Mark reacts

But the Senate President, David Mark, who declared public hearing open said the amendment was not meant to clip the independence of CBN but ensure that the bank conform to global best practice in the execution of its duties.

Mark represented by Senate Leader, Victor Ndoma Egba, said: “We do not have a pre-conceived position. I want to give that assurance that the Senate of the Federal Republic of Nigeria does not have a pre-conceived position.

“We will be guided by incite and the input and the best interest of Nigeria and I want to believe that those of you that will be speaking to us will provide the necessary justification for whatever position you canvassed. Let us know what the global practices are, we will be guided by the best global practices. So, I want to reassure everybody that this Senate is approaching the bill with an open mind.”

Co-chairman of the Committee, Senator Umar Dahiru said the bill was not about removing the powers of CBN put to ensure accountability and openness in the operations of the apex bank.

According to him, “the issue of submitting budget to the National Assembly is an issue of checks and balances, accountability, and openness.”