National Assembly proposes new capital base for CBN, single term for CBN Governor, deputies

The National Assembly has made strides with a proposal that could see the Central Bank of Nigeria’s (CBN) capital base soar to a whopping N1 trillion.

This proposition was part of a broader legislative effort encapsulated in a bill that recently advanced to its second reading in the Senate.

This bill, titled “Bill for an Act to Amend the Central Bank of Nigeria Act, 2007 to strengthen the Bank, and for other related matters thereto, 2024 (SB. 325),” is spearheaded by Senator Adetokunbo Abiru (APC, Lagos East), alongside the robust support of 41 other Senators, to amend various facets of the existing CBN Act, 2007.

Key among the proposed changes is a dramatic increase in the CBN’s authorized capital from the current N100 billion—a figure that legislators argue has been significantly diluted over time due to the naira’s devaluation.

This financial bolstering is seen as a crucial step in ensuring the CBN remains a formidable pillar in Nigeria’s economic landscape.

Senator Abiru, in his lead debate, underscored the bill’s potential to significantly empower the CBN in fulfilling its core mandates, marking a pivotal step towards enhancing Nigeria’s financial system integrity and stability.

He said:  “Recapitalization of the Bank; The Bank’s current authorized capital of ₦100 billion (One Hundred Billion Naira) as stated in section 4 (1) has over the years been eroded by the devaluation of the naira.

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“The Bill proposes to amend this to provide that the paid-up capital of the Bank shall be 1 Trillion Naira and may be increased from time to time by such amount as the Government may approve either by way of transfers from the General Reserve Fund or by such other means as the Government, in consultation with the Board, may approve.”

Another aspect of the bill is the restructuring of the CBN’s leadership tenure. It seeks to amend the apex bank’s law to introduce a single, non-renewable term of six years for both the governor and deputy governors, a move that could significantly influence the bank’s governance dynamics.

Senator Abiru said:  “Tenure of CBN Governor and Deputy Governors: Section 8 (2) of the CBN Act currently grants the Governor and Deputy Governor’s tenure of five years and they are eligible for re-appointment for another term not exceeding five years. The Bill proposes to amend this provision to provide a single non-renewal term of 6 years for the Governor and the Deputy Governors.

“In addition, the Bill proposes that where a vacancy is created by the death or resignation of a CBN Governor or Deputy Governor, the President can appoint an acting Governor in the interim pending the appointment of a substantive Governor or Deputy Governor. Where a substantive appointment is made, such appointment will be for a fresh term rather than serving the tenure of the previous Governor or Deputy Governor.”

Additionally, the bill proposes a meticulous overhaul of the country’s currency replacement process. Specifically, it advocates for a transition period where both old and new currency notes would concurrently serve as legal tender for two years.