Central Bank of Nigeria (CBN)
The Central Bank of Nigeria, CBN is the apex and regulatory bank which was established by the Act of Parliament in 1958 as amended in 1991, 1993,1997,1998,1999, and 2007.
The CBN Act of 2007 of the Federal Republic of Nigeria charges the Bank with the overall control and administration of the monetary and financial sector policies of the Federal Government.
Consequently, the Bank is charged with the responsibility of administering the Banks and Other Financial Institutions Act (BOFIA), 2020, with the sole aim of ensuring high standards of banking practice and financial stability through its surveillance activities, as well as the promotion of an efficient payment system.
In addition to its core functions, CBN has over the years performed some major developmental functions, focussed on all the key sectors of the Nigerian economy (financial, agricultural and industrial sectors). Overall, these mandates are carried out by the Bank through its various departments.
The Central Bank of Nigeria has the following objects of CBN
- It ensures monetary and price stability;
- Issue legal tender currency in Nigeria;
- Maintain external reserves to safeguard the international value of the legal tender currency;
- Promote a sound financial system in Nigeria; and
- Act as Banker and provide economic and financial advice to the Federal Government.
History of the Central Bank of Nigeria
G. D. Paton Report
The period 1892 – 1952, there was an enquiry by the then colonial administration to investigate banking practice in Nigeria. The G. D. Paton Report which emanated from the enquiry was the basis for the first Banking Ordinance of 1952.
The ordinance was designed to ensure orderly commercial banking and to prevent the establishment of unviable banks. A draft legislation for the establishment of Central Bank of Nigeria was presented to the House of Representatives in March, 1958. The Act was fully implemented on 1 July, 1959 when the Central Bank of Nigeria came into full operations.
Central Bank Act, 1958
The Central Bank Act, 1958 (as amended) and the Banking Decree 1969 (as amended) constituted the legal framework within which the CBN operates and regulates banks. The wide range of economic liberalization and deregulation measures following the adoption, in 1986, of a Structural Adjustment Programme (SAP) resulted in the emergence of more banks and other financial intermediaries.
The Banks and Other Financial Institutions (BOFI) Decrees 24 and 25 of 1991, which repealed the Banking Decree 1969 and all its amendments, were, therefore, enacted to strengthen and extend the powers of CBN to cover the new institutions in order to enhance the effectiveness of monetary policy, regulation and supervision of banks as well as non-banking financial institutions. Unfortunately in 1997, the Federal Government of Nigeria enacted the CBN (Amendment Decree No. 3 and BOFI (Amended)] Decree No. 4 in 1997 to remove completely the limited autonomy which the Bank enjoyed since 1991.
The 1997 Amendments
The 1997 amendments brought the CBN back under the supervision of the Ministry of Finance. The Decree made CBN directly responsible to the Minister of Finance with respect to the supervision and control of bank and other financial institutions, while extending the supervisory role of the bank to other specialised Banks and Financial Institutions. The amendment placed enormous powers on the Ministry of Finance while leaving the CBN with a subjugated role in the monitoring of the financial institutions with little room for the Bank to exercise discretionary powers.
The 1998 Amendments
The CBN (Amendment) Decree No. 37 of 1998 which repealed the CBN (Amended) Decree No. 3 of 1997. The Decree provided a measure of operational autonomy for the CBN to carry out its traditional functions and enhances its versatility.
The CBN Act, 2007
The current legal framework within which the CBN operates is the CBN Act of 2007 which repealed the CBN Act of 1991 and all its amendments. The Act provides that the CBN shall be a fully autonomous body in the discharge of its functions under the Act and the Banks and Other Financial Institutions Act with the objective of promoting stability and continuity in economic management. In line with this, the Act widened the objects of the CBN to include ensuring monetary and price stability as well as rendering economic advice to the Federal Government.
The BOFI (Amendment) Decree, 1998
Furthermore, the regulatory powers of the CBN were strengthened by the Banks and other Financial Institutions (Amendment) Decree No. 38 of 1998 which repealed BOFI (Amendments) Decree No. 4 of 1997. Through the amendments, the CBN may vary or revoke any condition subject to which a license was granted or may impose fresh or additional condition to the granting of a license to transact banking business in the country.
By the Decree, the CBN’s powers on banks, specifically those relating to withdrawal of licenses of distressed banks and appointment of liquidators of these banks, including the NDIC was restored.
The 1999 Amendment
The BOFI (Amendment) Decree No. 40 of 1999 makes the provisions relating to failing banks applicable to other financial institution. It also empowers the Governor of the CBN to remove any manager or officer of a failing bank or other financial institution.
The Money and Capital markets
The CBN has also taken responsibility for nurturing the money and capital markets. In furtherance of this, the CBN introduced treasury bills in 1960, treasury certificate in 1968, and facilitated the establishment of Lagos Stock Exchange in 1961 and the capital issue committee now known as the Securities & Exchange Committee in the early 1970s.
CBN Vision, Mission and Core Values
Vision: To be a people-focused Central Bank promoting confidence in the economy and enabling an improved standard of living.
Mission: To ENSURE monetary, price and financial system stability as a catalyst for inclusive growth and sustainable economic development. Core Values: CBN Core values include Integrity, Partnership, Accountability, Courage and Tenacity.
Various Departments in CBN
In March 2010, the Central Bank of Nigeria launched its restructuring program tagged Project ACE with a view to repositioning and reinventing CBN for sustainable improvement of overall Accountability, Communication, Efficiency and Effectiveness
The imperative for change was anchored on the CBN’s recognition of the need to gear up its systems and organization for strategic and business effectiveness issues. To ensure efficiency and effectiveness, and also to enhance smooth communication between and among departments, a new Management Structure was also put in the place to drive this Change.
There are 28(Twenty Eight) Departments in the Central Bank of Nigeria grouped in order of related performance and job descriptions (JDs) to facilitate smooth operations and management of those department. The formation of these directorates also reduces the pressure that would have brought to bear on the chief executive (the Governor CBN). Each directorate is headed by deputy governor (D/G).
Directorates in CBN
- Corporate Services Directorate
- Economic Policy Directorate.
- Financial System Stability Directorate
- Governors’ Directorate
- Operations Directorate
Past and Present Governors of CBN
- (Late)Roy Pentelow Fenton From: 7/24/1958 – 7/24/1963
- (Late)Alhaji Aliyu Mai-Bornu From: 7/25/1963 – 6/22/1967
- (Late)Dr. Clement Nyong Isong From: 8/15/1967 – 9/22/1975
- (Late)Mallam Adamu Ciroma From: 9/24/1975 – 6/28/1977
- (Late)Mr. O. O. Vincent From: 6/28/1977 – 6/28/1982
- (Late)Alhaji Abdulkadir Ahmed From: 6/28/1982 – 9/30/1993
- Dr. Paul A. Ogwuma, OFR From: 10/1/1993 – 5/29/1999
- Chief (Dr.) J. O. Sanusi, CON From: 5/29/1999 – 5/29/2004
- Prof. Chukwuma C. Soludo, CFR From: 5/29/2004 – 5/29/2009
- Mallam Sanusi Lamido Sanusi (CON) From: 6/3/2009 – 6/2/2014
- Godwin Emefiele (CON) – 3 June 2014 – Incumbent
Credit: The Central Bank of Nigeria
