The Central Bank governor and his declaration of allegiance – Part 2

In 1975, the members of the Constitution Drafting Committee argued among themselves on the exact role of the Governor of the Central Bank of Nigeria especially on monetary matters.

The members of the subcommittee on the Economy, Finance and Division of Powers headed by Dr. Pius Nwabufo Charles Okigbo(1924-2000) from Ojoto Village in Idemili Local Government Area of Anambra State, never wanted a conflict between the Governor of the Central Bank and the Minister of Finance. Other members of the subcommittee were Dr. Bala Usman, Senior Lecturer in History at the Ahmadu Bello University, Zaria, Dr. Segun Osoba, then Senior lecturer in history at the University of Ife (now Obafemi Awolowo University, Ile-Ife), Chief Rasheed Gbadamosi, pioneer Commissioner of Economic Development in Lagos State, Dr. O. Oyediran, then Senior lecturer in Political Science at the University of Ibadan, Dr Ali Alhakeem, an Economist and former deputy General Manager, Bank of the North, later full time Chairman Nigerian Indigenisation Board, Chief I.I. Murphy, former Parliamentarian in the first republic and Commissioner in the Old South Eastern State, Dr. E.C. Edozien, Senior Lecturer in Economics at the University of Ibadan, Professor Sam Aluko, Professor of Economics at the University of Ife, now Obafemi Awolowo University,Ile Ife and Dr. V.P. Diejomaoh, Professor of Economics at the University of Lagos.

The only schedule recommended for the Governor of the Central Bank of Nigeria by the subcommittee was the membership of the National Economic Council. In paragraph 4 of their submission, the subcommittee recommended that “the National Economic Council should have the following members: the Vice President as the Chairman, the nineteen governors, the Governor of the Central Bank of Nigeria and Chairman of the Economic Planning Commission”.

In May 1976, General Olusegun Obasanjo, the then Head of State, appointed a nine-man committee headed by Dr. Okigbo, who was then the Economic Adviser to the Federal Government. The Committee submitted its report to the Government in December, 1976; its findings and recommendations have since then greatly influenced the growth and direction of the Nigerian financial system. At the time of the Okigbo Committee on the Review of Nigerian Financial System in 1977, there were a total of 21 banks in Nigeria comprising 18 commercial and cooperative banks and 3 merchant banks. These 21 banks had a total of 487 branches across branches across the country.

By the end of March, 1991 the number of banks had shot up to a total of 115 comprising 62 commercial and cooperative banks and 53 merchant banks with a total branch office network of 2,021. Banking programme was established as a result of the recommendations made by the Okigbo Review Committee in recognition of the vital role which the banking system could play in the transformation of the rural areas of the country.

Furthermore, as a result of the Okigbo Review Committee recommendation, the Federal Government decided to intervene massively in the ownership structure of the erstwhile foreign banks and, in promulgation the Nigerian Enterprises Promotion Decree 1977, banking was classified as a Schedule enterprise requiring mandatory minimum Nigerian participation of 60% of equity share holding.

In the third schedule of the 1979 Constitution it ruled that “the National Economic Council shall comprise the following members, namely—-(a) the Vice President who shall be Chairman (b) the Governor of each State; and the Governor of the Central Bank of Nigeria established under the Central Bank of Nigeria Act, or any enact replacing the Act.

The National Economic Council shall have power to advise the President concerning the economic affairs of the Federation, and in particular on measures necessary for the co-ordination of the economic planning efforts or economic programmes of the various Governments of the Federation”.

Also in the third schedule of the 1999 Constitution, it states that “ the National Economic Council shall comprise the following members—the Vice-President who shall be Chairman (b) the Governor of each State of the Federation; and (c) the Governor of the Central Bank of Nigeria established under the Central Bank of Nigeria Decree 1991, or any enactment replacing that Decree”.

Until August 20, 1991, the Central Bank was one of the parastatals under the Ministry of Finance. It was General Ibrahim Badamosi Babangida (81) GCFR, the then Head of State, that promulgated two decrees on that day. The decrees gave full independence to the Central Bank of Nigeria and removed it from the shackles of the Ministry of Finance.

That was during the tenure of Prince Bolasodun Adesunmbo Ajibola (88), former President of the Nigerian Bar Association between 1984 and 1985 and Attorney General of the Federation and Minister of Justice from 1985-1991.

The Decrees were, Central Bank of Nigeria Decree 24 and Bank and other Financial Institutions Decree 25 of 1991.
Decree 24 gave sole authority to the Central Bank of Nigeria to be responsible for the regulation of banking and other related financial services in Nigeria.

Speaking at a workshop in Lagos in December 1991, Prince Ajibola said “the bank now has the power to set guidelines for any person or institution that engages in the provision of financial services – including commercial and development banks, bureau de change, discount houses, finance houses and even insurance companies.

The new powers conferred on the Central Bank of Nigeria have clearly introduced some noteworthy changes in the relationship between several sectors of the country’s financial services which hitherto had been regulated by other functionaries and bodies such as the Director of lnsurance in the Federal Ministry of Finance and the Securities and Exchange Commission to name only two.
To be continued tomorrow
Teniola, a former director at the Presidency wrote from Lagos.