According to the new CBN Act 2007, signed into law May 25, 2007 by former President Olusegun Obasanjo, the appointment of deputy governors and non-executive directors for the apex bank would also go through Senate confirmation.
Also in the Act is a provision that anyone who marches, hawks, mutilates or sprays the nation’s currency, the naira, during social occasions would be deemed to have committed an offense and shall be liable to six months imprisonment and or a fine of N50, 000.
The new Act, was gazetted early this month. It also expressed the autonomy of the CBN, recognising it as an “independent” institution, with full financial independence, as well as in the execution of its mandate.
The Act, which repeals the CBN Act 1991, states in part: “The Governor and Deputy-Governors shall be persons of recognised 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. He may, under the circumstances specified in the Act, be removed from office by the President, provided that removal is supported by two-thirds of the Senate”.
“The Governor and Deputy Governors shall be appointed in the first instance for a term of five years and shall each be eligible for re-appointment for another term not exceeding five years. Provided that, of the first Deputy Governors to be so appointed, one shall in the first instance be appointed for three years and two shall in the first instance be appointed for four years,” the Act reads in part.
On the appointment of the five directors of the apex bank, the new Act states that “the five Directors of the Bank shall be appointed by the President subject to confirmation by the Senate and in appointing the five external Directors of the Bank, the President shall have due regard to a fair representation of the financial, agricultural, industrial and commercial interests and the principle of Federal Character.”
The new Act also spelt out punishment for anybody that refuses mutilated or refuses to accept the Naira.
“A person who refuses to accept the Naira as a means of payment is guilty of an offence and liable on conviction to a fine of N50, 000 or 6 months imprisonment: Provided that the Bank shall have powers to prescribe the circumstances and conditions under which other currencies may be used as medium of exchange in Nigeria.
“A person shall, who tampers with a coin or note issued by the Bank, be guilty of an offence and shall on conviction be liable to imprisonment for a term not less than six months or to fine not less than N50,000 or both such fine and imprisonment.
“A coin or note shall be deemed to have been tampered with if the coin or note has been impaired, diminished or lightened otherwise than by fair wear and tear or has been defaced by stumping, engraving, mutilating, piercing, stapling, writing, tearing, soiling, squeezing or any other form of deliberate and willful abuse whether the coin or note has not been thereby diminished or lightened.
“For the avoidance of doubt, spraying of, dancing or matching on the Naira or any note issued by the Bank during social occasions or otherwise howsoever shall constitute an abuse and defacing of the Naira or such note, shall be punishable under Sub-section (1) of this section,” the Act also reads.
Commenting on the independence of the CBN, the Act stated that, “In order to facilitate the achievement of its mandate under this Act and the Banks and Other Financial Institutions Act, and in line with the objective of promoting stability and continuity in economic management, the Bank shall be an independent body in the discharge of its functions. Subject to the limitations in this Act, the Bank may acquire, hold and dispose of movable and immovable property for the purpose of its functions.”The new Act, which now requires the CBN to furnish the National Assembly with its annual accounts and financial statements, also gives the banking watchdog greater flexibility in the selection of instruments and assets in which to invest the nation’s external reserve.
The new Act also requires the CBN to ensure monetary and price stability and to act as economic and financial adviser to the Federal Government while it raised the apex bank’s authorised capital from N300 million to N100 billion and extended membership of the board to include Accountant-General of the Federation.
Due to the various weaknesses of the CBN Act 1991 (with its various amendments), the Federal Executive Council deliberated on various amendments in three special sessions last year with a view to repealing the existing Act and re-enact a new law that would not only put the Bank in tune with international best practices but also strengthen its capacity to effectively and efficiently deliver on its core mandates.
Consequently, an extensively revised CBN Bill was sent to the National Assembly in late 2006, as well as the Bank and Other Financial Institutions Act (BOFIA). After long delays and scrutiny, the National Assembly finally passed the CBN Act early last Month, and former President Obasanjo assented to it and the Act was gazetted.