The CBN Board of Directors And Not the President Is Responsible for The CBN Policies Under the Law

By S. G. Idrees

The recent debacle since the public announcement by the Governor of the Central Bank of Nigeria, Mr Godwin Emefiele on the 26th of October 2022, on the Naira Redesign and the probable CBN Cashless Policy for the Federal Republic of Nigeria is an issue that is baking for a lot of questions on the need to clear the air as to whose responsibility is to design policies, approved any policy and implement those policies for the Central Bank of Nigeria?

To answer this very potent question, recourse must be paid to the provisions of the Central Bank of Nigeria Act 2007, which seems to have vested that in the hands of the Board of Directors of the Central Bank, going by the provision of section 6 of the CBN Act, where it reads thus:

“(1) There shall be for the Bank a Board of Directors (in this Act referred to as “the Board”) which shall be responsible for the policy and general administration of the affairs and business of the Bank.
(2) the Board shall consist of –
(a) a Governor who shall be the Chairman;
(b) four (4) Deputy Governors;
(c) the Permanent Secretary, Federal Ministry of Finance;
(d) five (5) Directors; and
(e) Accountant-General of the Federation.
(3) The Board shall be responsible for –
(a) the consideration and approval of the annual budget of the Bank;
(b) the approval of the audited and management accounts and the consideration of the management letter from the external auditors.
(c) the formulation and implementation of exchange rate policy;
(d) making recommendations to the President for the appointment of auditors in accordance with section 49 of this Act, the provision of the necessary facilities and the rates of remuneration;
(e) the establishment and closing of branches and currency centres; and.
(f) carrying out of such other activities as are necessary and expedient for the purposes of achieving the objectives of the Bank.
(4) The Board shall approve the detailed responsibilities of each of the Deputy Governors on the recommendation of the Governor.
(5) Without prejudice to Sub-section (4) of this section, the Board may, on the recommendation of the Governor, assign or re-assign the Deputy Governors, from time
to time, as may be expedient for the performance of the Bank’s functions under or pursuant to this Act.”

Furthermore, section 2 of the Central Bank of Nigeria Act 2007 provides for the functions of the Central Bank, where it provides thus:
“The principal objects of the Bank shall be to –
(a) ensure monetary and price stability;
(b) issue legal tender currency in Nigeria;
(c) maintain external reserves to safeguard the international value of the legal tender currency;
(d) promote a sound financial system in Nigeria; and
(e) Act as banker and provide economic and financial advice to the
Federal Government.”

As if to leave no one in doubt section 1 of the Central Bank of Nigeria Act, ensure the independence of the Bank, where it reads:
“(1) There is established for Nigeria a body known as the Central Bank of Nigeria (hereinafter in this Act referred to as “the Bank”).
(2) The Bank shall be a body corporate with perpetual succession and a common seal and may sue and be sued in its corporate name.
(3) In order to facilitate the achievement of its mandate under this Act and the Banks and Other Financial Institutions Act, and in line with the objective of promoting stability and continuity in economic management, the Bank shall be an independent body in the discharge of its functions.
(4) Subject to the limitations in this Act, the Bank may acquire, hold and dispose of movable and immovable property for the purpose of its functions.”

That considering the burning issue of the more, the Naira Redesign, sections 17, 18, 19 and 20 of the Central Bank of Nigeria Act 2007 is very instructive, where the sections provide as follows:
“17. The Bank shall have the sole right of issuing currency notes and coins throughout Nigeria and neither the Federal Government nor any State Government, Local Government, other person or authority shall issue currency notes, bank notes or coins or any documents or tokens payable to the bearer on demand being document or token which are likely to pass as legal tender.

  1. The Bank shall –
    (a) arrange for the printing of currency notes and the minting of coins;
    (b) issue, re-issue and exchange currency notes and coins at the Bank’s offices and at such agencies as it may, from time to time, establish or appoint;
    (c) arrange for the safe custody of un-issued stocks of currency notes and for the preparation, safe custody and destruction of plates and paper for the printing of currency notes and disc for the minting of coins; and
    (d) arrange for the destruction of currency notes and coins withdrawn from circulation under the provisions of section 20 (3) of this Act or otherwise found by the Bank to be unfit for use.
  2. (1) The currency notes and coins issued by the Bank shall be –
    (a) in such denominations of the Naira or fractions thereof as shall be approved by the President on the recommendation of the Board; and
    (b) of such forms and designs and bear such devices as shall be approved by the President on the recommendation of the Board.
    (2) The standard weights and composition of coins issued by the Bank and the amount of remedy and variation shall be determined by the President on the recommendation of the Board.
  3. – (1) The currency notes issued by the Bank shall be legal tender in Nigeria at their face value for the payment of any amount.
    (2) The coins issued by the Bank shall, if such coins have not been tampered with, be legal tender in Nigeria at their face value up to such amount or amounts as may be determined, from time to time, by the Bank.
    (3) Notwithstanding subsections (1) and (2) of this section, the Bank shall have power, if directed to do so by the President and after giving reasonable notice on that behalf, to call in any of its notes or coins on payment of the face value thereof and any note or coin with respect to which a notice has been given under this sub-section, shall, on the expiration of the notice, cease to be legal tender, but, subject to section 22 of this Act, shall be redeemed by the Bank upon demand.
    (4) It shall be an offence punishable by a term of imprisonment of not less than 5 years for any person to falsify, make or counterfeit any bank note or coin issued by the Bank which is legal tender in Nigeria.
    (5) A person who refuses to accept the Naira as a means of payment is guilty of an offence and liable on conviction to a fine of N50,000 or 6 months imprisonment:
    Provided that the Bank shall have powers to prescribe the circumstances and conditions under which other currencies may be used as a medium of exchange in Nigeria.”

It is my candid view that when one considers a community reading of section 1, 2, 6, 17, 18, 19 and 20 of the CBN Act 2007, it will be clear that the President of the Federal Republic of Nigeria has no direct roll in the formulation and implementation of the CBN policies and as provided by section 6 of the act, that falls squarely on the doorsteps of the CBN Board of Directors under the leadership of the Governor of the Central Bank of Nigeria, but if any, section 19 (1) (a) (b) (2) and 20 (3) where on issues pertaining to; denomination, or redenomination of currency, forms, design, standard weights and composition of coins issued by the Bank and the amount of remedy and variation. But it is worthy of note that the powers of the President mentioned above are subject to the recommendation of the Board of the Central Bank as well.

Therefore, the constant invitation of Mr. President to meddle in the activities of the Bank outside the ones envisaged by sections 19 and 20 of the CBN Act, will have consequences in the near future in the health of the nation’s economy. If anything goes forward, the office of the President of the Republic should stick to its power of appointing a credible and competent Governor or better still, a Board of Directors for the Bank and no more.

Barr S. G. Idrees, Private Legal Practitioner Based in Bauchi State.

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