Bill to Limit CBN Governor’s Tenure Passes Senate’s Second Reading

A proposed bill aiming to restrict the tenure of the governor and deputy governors of the Central Bank of Nigeria (CBN) to a single non-renewable term of six years has successfully passed its second reading at the Senate.

Sponsored by Adetokunbo Abiru, the Senator representing Lagos East and Chairman of the Senate Committee on Banking, the bill progressed during the session on Tuesday. The legislation also introduces provisions for handling vacancies resulting from the death or resignation of a CBN governor or deputy governor. It suggests that the President of the Federation can appoint an acting governor temporarily, pending the selection of a substantive governor or deputy governor.

According to the bill, in cases of substantive appointments, individuals would serve a fresh term rather than completing the tenure of their predecessors. Abiru, leading the debate on the bill, emphasized that adopting a single non-renewable term for CBN governors and deputies could mitigate political influence on monetary policy decisions.

“Empirical evidence shows that a single term for the members of the Executive and Board members of central banks helps to reduce political influence on monetary policy decisions and the time inconsistency problem associated with non-independent central banks,” stated Senator Abiru. “This is the practice adopted by many independent Banks such as the US Federal Reserve and the European Central Bank where their chief executive officers serve only one non-renewable term.”

In addition to addressing political influence concerns, the bill seeks to empower career staff of the CBN, allowing them to ascend to the position of deputy governors. Senator Abiru also highlighted that the proposed legislation aims to facilitate the federal government in appointing at least one female among the external directors of the country’s monetary policy committee. He suggested that five external directors of the CBN should hold office for a non-renewable term of five years.

Following the compelling debate, Senate President Godswill Akpabio directed the bill to the banking committee for further legislative action, with a mandate to report back to the Senate within two weeks.