The mandate of the Central Bank of Nigeria, CBN, is derived from the 1958 Act of Parliament that established the Bank. The Act has been amended six times since then to respond to contemporary challenges and the expansion of the economy.
The Act was amended in 1991, 1993, 1997, 1998, 1999 and 2007.
The CBN Act of 2007 therefore charges the Bank with the overall control and administration of the monetary and financial sector policies of the Federal Government.
The mandate of the CBN, therefore, is to 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.
The Bank is also 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.
Monetary Policy Committee, MPC
The MPC is the highest policy making committee of the Bank with the mandate to review economic and financial conditions in the economy; determine appropriate stance of policy in the short to medium term; review regularly, the CBN monetary policy framework and adopt changes when necessary; and communicate monetary/financial policy decisions effectively to the public and ensure the credibility of the model of transmission mechanism of monetary policy.
The CBN Act 2007 states inter alia: "In order to facilitate the attainment of the objective of price stability and to support the economic policy of the Federal Government, there shall be a Committee of the Bank known as the Monetary Policy Committee (in this Act referred to as 'the MPC')."
The MPC consists of the governor of the CBN, who doubles as the chairman of the committee; the four deputy governors of the Bank; the two members of the board of directors of the Bank; three members appointed by the President; and two members appointed by the CBN governor.
The MPC meeting is held for two consecutive days once every two months. On the second day, journalists are briefed on the outcome of the meeting and they have an opportunity to quiz the CBN governor on the latest interest rate, exchange rate, measures to curb inflationary pressure and so on.
The Committee meeting has however suffered a series of postponements since July last year when it held its last meeting, with the attendant consequences. Due to this lack of direction, we have seen impact in the chaos and instability in the monetary side of the economy.
The Economic Confidential reports that MPC held its last meeting which was the 292nd on July 24 and 25, 2023, when members voted to marginally increase the Monetary Policy Rate, MPR, from 18.5 per cent to 18.75 per cent.
The Bank postponed the MPC meeting scheduled for Monday and Tuesday, September 25 and 26, which would have been the first meeting under Yemi Cardoso.
The meeting would have enabled him to face the press to answer questions about what he is doing on the free fall of the Naira among other pertinent issues troubling the economy.
That was the second time the MPC meeting had been postponed since the Committee was established. The first time was in January 2020 when the first MPC meeting of the year was postponed from January 20-21 to January 23-24.
This means that postponement of MPC meetings is a rare occurrence which may be due to the fact that Mr Cardoso was settling down in his new office.
Despite the surge in inflation, which hit 27.33 per cent in October 2023, and high expectation of the new CBN leadership, the apex Bank leadership postponed the MPC meeting again in November 2023.
In the process of understanding the rot he met in the system and how to pull the economy out of the hole he met it, Mr Cardoso decided to put certain parameters in place before resuming MPC meetings.
Meanwhile, inflation has hit 30 percent while the Naira continues to decline against the Dollar as Nigerians continue to groan over declining purchasing power in the midst of rising prices of goods.
Respite at Last
As part of measures to start the new year on a fresh and reassuring note, the CBN held a two-day strategic session for members of the MPC a fortnight ago.
The session was preparatory to its first meeting under Mr Cardoso which is scheduled for Monday, February 26 and Tuesday, February 27.
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According to the apex Bank's spokesperson, Mrs. Hakama Sidi-Ali, the session was meant for members to brainstorm and engage in an in-depth discussion about the committee's objectives.
She revealed that the critical focus areas during the retreat included deliberations on the strategic plan to effect necessary improvement in the monetary policy transmission mechanism.
According to her, the sessions were facilitated by former MPC members, monetary policy communication specialists at the IMF and Directors of Departments critical to the MPC process.
"The valuable insights gained from these discussions will significantly contribute towards the robustness of the forthcoming MPC meetings," she noted.
To underscore the Bank's seriousness this year, a calendar of meetings of the MPC for 2024 was published on the CBN website and it indicates that the meetings have been scheduled for February, March, May, July, September and November.
Based on the recent steps taken by the CBN leadership, it is obvious that the initial hiccup is now over and Nigerians can look forward to a more stable economy in 2024 and beyond.
*Abdulraheem, an author and Managing Editor at Image Merchant Promotion, IMPR, wrote from Abuja
