Jibrin Abubakar
14 April 2009
Owing to the poor performance of the economy and the inability of the regulators to stem the tide of the country's economic woes, an economist has advocated for an independent and autonomous regulator.
Speaking to Daily Trust on phone Malam Gambo Hamza said: "My suggestion is that there is a need to establish another financial service regulatory authority which is independent of the CBN. This will make the CBN to concentrate on monetary issues."
According to him, it is being practice in the United States and the United Kingdom.
Daily Trust can report that the Financial Services Authority (FSA) in the United Kingdom is an independent non-governmental body, given statutory powers by the Financial Services and Markets Act 2000. It is a company limited by guarantee and financed by the financial services industry.
The Treasury appoints the FSA Board, which currently consists of a Chairman, a Chief Executive Officer, three Managing Directors, and 9 non-executive directors (including a lead non-executive member, the Deputy Chairman). This Board sets our overall policy, but day-to-day decisions and management of the staff are the responsibility of the Executive.
The FSA is accountable to Treasury Ministers and through them to Parliament. It is operationally independent of Government and is funded entirely by the firms it regulates. The FSA is an open and transparent organisation and provides full information for firms, consumers and others about its objectives, plans, policies and rules.
According to Malam Hamza, the financial service regulatory authority will be in charge of all financial organisations, while maintaining its independence and autonomy.
He said the CBN should be limited to monetary policy formulation and guidelines, and not regulation.
He said it is easy for corruption to set in when an organisation like the CBN controls virtually everything in the economy.
He said the position of the CBN governor is too powerful and that was what brought about the profound concerns on who occupies the seat.
The tenure of the incumbent governor of the CBN Professor Chukwuma Soludo expires next month.
The CBN has failed to control inflationary rate which currently hovers around 15 per cent, experts say.
In the same vein, Dr. Sanusi Abubakar, an economist told Daily Trust yesterday that one of the solutions to the meltdown of the country's stock market is to have an alternative stock market in Abuja. This, he said may be called the Abuja stock market.
Daily Trust can report that the call to have an alternative stock market is not a new one.
But Malam Hamza disagreed, saying Nigeria has not reached the stage of having another Stock Exchange.
"What we need is better regulation. How can the Director General of Nigerian Stock Exchange (NSE) be the chairman of Trans National Corporation (Transcorp)? You can also see the problem between Dangote and AP. Dangote is a Vice President of the NSE. The only thing is that the NSE should stop operating as a CUH."
Daily Trust can report that from a peak of N12.6trillion capitalisation in March 2008, the NSE went into a spiralling decline, dropping 45.8% by the end of the year.
Nigerian Stock Exchange All Share Index fell 37 percent this year, the steepest quarterly decline in more than a decade and the worst of 89 benchmark indexes tracked by Bloomberg.
Meanwhile, the report of the SEC Committee on the Nigerian Capital Market has said that the contributory factors for the decline the investors' confidence are: Ineffective market regulation and supervision, weak institutions and corporate governance, lack of regulatory pro-activity and cohesion, unregulated margin financing, concerns about transparency, uncompetitive cost structures , inefficient and cumbersome processes.
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