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Published On: Sun, Jan 7th, 2018

Analysts raise concern over CBN’s depleted MPC membership


  • May not form quorum in January MPC meeting
  • Likely to dampen investor confidence and jeopardize 2018 growth- analysts.


A fog of uncertainty hangs over the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) as the prospect of holding its regular quarterly meeting in January dims. A major reason for the current logjam is the ongoing tussle between the Presidency and the National Assembly over the Senates refusal to confirm the appointment of Ibrahim Magu as the substantive Chairman of the Economic and Financial Crime Commission (EFCC). The Senate had insisted last year that it would not approve any new appointments of the President until the issue of the EFCC Chairman had been resolved by replacing Magu with somebody else. This has resulted in the CBN ending up with an undersized Policy Committee.

Regulatory observers note that the CBN Act of 2007, which empowers the MPC to formulate monetary and credit policies, stipulates that the committee should have 12 members, headed by the CBN governor. It also states that a minimum of six members is required to form a quorum at any meeting. The Committee presently has only five members, following the retirement of Sarah Alade, former Deputy Governor, Economic Policy in April last year; Adebayo Adelabu, Deputy Governor, Corporate Services, who tendered his resignation letter in a rumoured bid to contest for the governorship of Oyo State election in 2019. The MPC also saw the retirement of Suleiman Barau, Deputy Governor, in charge of Operations on December 12th 2017, a resignation that further decimated the membership of the committee.

The President had in April appointed Ummu Ahmed Jalingo, Justitia Odinakachukwu Nnabuko, Mike I. Obadan, Abdu Abubakar, and Adeola Adetunji as non-executive directors of the CBN board. He also nominated Aishah Ahmad as Deputy Governor and Adeola Adenikinju; Aliyu Sanusi; Robert Asogwa and Asheikh Maidugu as members of the MPC in October last year.  Dr Doyin Salami and some other members of the committee retired earlier in the year.  But two months after, the Senate stuck to its guns not to screen any nominee from the president until the EFCC boss was shown the exit.

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Financial sector analysts note that with the present number of Board members, the year’s inaugural policy meeting may not hold for lack of a quorum, a likelihood confirmed by a senior CBN official, who preferred anonymity.

Professor Leo Ukpong, Dean, School of Business, University of Uyo reasoned that the inability of the committee to form a quorum would not stop it from meeting in January. “But usually, because of the critical nature of that committee, they would have to vote with whatever number they have. However, their votes are already predetermined. The executive arm of government has a influence in what they do. So, I don’t think it would have a seriously adverse effect. Although it might create a bit of uncertainty in the money market, because the market would have to second guess policy direction” he further explained.

Johnson Chukwu, Managing Director, Cowry Assets Management Company Limited observes that, “the CBN can still manage the monetary policies of the country without the MPC. But we are not going to get optimal results. It does not mean that if the MPC is not working then the CBN would abandon its function of overseeing monetary policy. My take is that this is not the best for the country or the economy. It will take a slug at the confidence of foreign investors.  And it could lead to skewed policy decisions’, he noted.

A policy problem would be whether or not decisions taken at an MPC meeting that does not meet the minimum quorum mandate would be legally effective. In the opinion of Moses Ojo, an analyst at Panafrican Capital Plc, ‘the fact that they won’t form a quorum should not stop the Monetary Policy Committee from meeting. They can meet and take decisions. The enforcement of these decisions is what maybe a constitutional issue. Whether they will be able to enforce a hold, raise or cut decision in monetary rates is now an issue that legal luminaries may need to interpret” he observes.

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The CBN Act of 2007 states that the MPC shall comprise of the Governor of the Bank who shall be the Chairman; the four Deputy Governors of the Bank; two members of the Board of Directors of the Bank; three members appointed by the President andtwo members appointed by the Governor.

The MPC had nine of its members in attendance during its last meeting in November, where it held the Monetary Policy Rate (MPR) otherwise called benchmark interest at 14 per cent for the eighth consecutive quarter.

Meanwhile, The CBN governor, Godwin Emefiele, recently hinted that the financial regulator would consider reviewing interest rate downward in 2018, if the economy, which he said was still fragile, improves.

Jim Obazee, a former executive secretary, Financial Regulatory Council (FRC) has argued that the CBN Act negates the principle of good corporate governance, because its board of directors, which is chaired by the Governor of the Bank is dominated by the bank’s management.  This creates a further crease in the governance issues of the regulator, but the immediate challenge the Bank faces is packing its Policy Committee with the needed bodies to make monetary policy decisions of the Bank count. Continued lack of clarity on the legality of decisions taken by a Committee not made up of its full complement of quorum-forming members could lead to a hailstorm of future litigations, a situation analyst believe should best be avoided.

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