In this post, we explained the History of the Central Bank of Nigeria (CBN), state addresses/ locations, Functions of the Central Bank, Policy implementation and criticism and list of former Governors of the Central Bank of Nigeria. Also the appointment central bank of Nigeria governors.
Introduction
The Central Bank of Nigeria is the central bank and apex monetary authority of Nigeria established by the CBN Act of 1958 and commenced operations on 1 July 1959. The major regulatory objectives of the bank as stated in the CBN Act are to: maintain the external reserves of the country, promote monetary stability and a sound financial environment, and act as a banker of last resort and financial adviser to the federal government.
Read: Oil and Gas License/ Permits in Nigeria
The central bank’s role as lender of last resort and adviser to the federal government has sometimes pushed it into murky regulatory waters. After the end of imperial rule, the desire of the government to become pro-active in the development of the economy became visible especially after the end of the Nigerian civil war, the bank followed the government’s desire and took a determined effort to supplement any show shortfalls, credit allocations to the real sector.
The bank became involved in lending directly to consumers, contravening its original intention to work through commercial banks in activities involving consumer lending. However, the policy was an offspring of the indigenization policy at the time. The bank has thirty-six branches each in the 36 states of the federation and the headquarters in FCT.
History of Central Bank of Nigeria (CBN)
In 1948, an inquiry under the leadership of G.D Paton was established by the colonial administration to investigate banking practices in Nigeria. Prior to the inquiry, the banking industry was largely uncontrolled. The G.D Paton report, an offshoot of the inquiry became the cornerstone of the first banking legislation in the country: the banking ordinance of 1952.
The ordinance was designed to prevent non-viable banks from mushrooming and to ensure orderly commercial banking. The banking ordinance triggered rapid growth in the industry, and with growth also came disappointment. By 1958, a few banks had failed. To curtail further failures and to prepare for indigenous control, in 1958, a bill for the establishment of the Central Bank of Nigeria was presented to the House of Representatives of Nigeria.
The Central Bank of Nigeria Act No. 24, 1958 was published as chapter 30 of the 1958 edition of the Laws of Nigeria and Lagos. It was fully implemented on 1 July 1959, when the Central Bank of Nigeria came into full operation and remained the primary statute governing the CBN until its repeal by the Central Bank of Nigeria Act No.24, 1991. In April 1960, the Bank issued its first treasury bills.
Read: NCEC Certificate Registration
In May 1961, the Bank launched the Lagos Bankers Clearing House, which provided licensed banks a framework in which to exchange and clear checks rapidly. By 1 July 1961, the Bank had completed issuing all denominations of new Nigerian notes and coins and redeemed all of the British West African pounds that were circulating in Nigeria.
Functions of the Central Bank
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. The functions of the CBN are as follows:
- Ensure 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.
Consequently, the Bank is charged with the responsibility of administering the Banks and Other Financial Institutions (BOFI) Act (1991) as amended, 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, focused 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.
Policy implementation and criticism
The CBN’s early functions were mainly to act as the government’s agency for the control and supervision of the banking sector, to monitor the balance of payments according to the demands of the federal government and to tailor monetary policy along the demands of the federal budget. A key instrument of the bank was to initiate credit limit legislation for bank lending.
Read: NCEC Categories and Services
The initiative was geared to make credit available to neglected national areas such as agriculture and manufacturing. By the end of 1979, most of the banks did not adhere to their credit limits and favoured a loose interpretation of CBN’s guidelines. The central bank did not effectively curtail the prevalence of short-term loan maturities. Most loans given out by commercial banks were usually set within a year.
The major policy to balance this distortion in the credit market was to create a new Bank of Commerce and industry, a universal bank. However, the new bank did not fulfill its mission. Another policy of the bank in concert with the intentions of the government was direct involvement in the affairs of the three major expatriate commercial banks in order to forestall any bias against indigenous borrowers and consumers.
By 1976, the federal government had acquired 40% of equity in the three largest commercial banks. The bank’s slow reaction to curtail inflation by financing huge deficits of the federal government has been one of the sore points in the history of the central bank. Coupled with its failure to control the burgeoning trade arrears in 1983, the country was left with huge trade debts totaling $6 billion.
Who Appoints the Governor of Central Bank of Nigeria?
The Governor and Deputy-Governors shall be persons of recognized financial experience and shall be appointed by the President subject to confirmation by the Senate on such terms and conditions as may be set out in their respective letters of appointment.
List of Central Bank of Nigeria (CBN) Governors
Below list contained the list of former Governor of the Central Bank of Nigeria till date:
1. Roy Pentelow Fenton
First Governor of the Central Bank of Nigeria
Term: 24 July 1958 to 24 July 1963
2. Aliyu Mai-Bornu
Second Governor of the Central Bank of Nigeria
Term: 25 July 1963 to 22 June 1967
3. Clement Nyong Isong
Term: 15 August 1967 to 22 September 1975
4. Malam Adamu Ciroma
Term: 24 September 1975 to 28 June 1977
5. Mr. Ola Vincent
Term: 28 June 1977 to 28 June 1982
6. Alhaji Abdulkadir Ahmed
Term: 28 June 1982 to 30 September 1993
7. Dr. Paul Agbai Ogwuma
Term: 1 October 1993 to 29 May 1999
8. Chief Joseph Oladele Sanusi (CON)
From: 29 May 1999 to 29 May 2004
9. Prof. Charles Chukwuma Soludo (CFR)
Term: 29 May 2004 to 29 May 2009
10. Mr. Sanusi Lamido Aminu Sanusi (CON)
From: 3 June 2009 to 20 February 2014
11. Mr. Godwin Emefiele (CON)
Term: 3 June 2014 to date
Addresses/ locations of Central Bank of Nigeria
Head office: Plot 33, Abubakar Tafawa Balewa Way Central Business District, Cadastral Zone, Abuja,
Federal Capital Territory, Nigeria.
Read: CBN States Addresses/ Locations in Nigeria
Components of Central Bank of Nigeria
A central bank of Nigeria is an independent national authority that conducts monetary policy, regulates banks, and provides financial services including economic research. Its goals are to stabilize the nation’s currency, keep unemployment low and prevent inflation.