CBN’s planned removal of external MPC members raises interference concerns

THE proposed decision of the Central Bank of Nigeria (CBN) to replace the external members of its Monetary Policy Committee (MPC) has raised questions about possible interference in monetary policy decisions.

Bloomberg reports noted that some of the members said they’ve been sidelined ahead of a meeting next month, which has not been held since July 2023.

Four of the five external members of the 12-seat MPC, who spoke to Bloomberg on the condition of anonymity, said they have not been paid since August, last heard from the central bank in September, and have been excluded from the usual planning ahead of the Feb. 26-27 gathering. The fifth member did not respond to requests for comment.

The apex bank official spokesperson, Sidi Hakama, said the appointment of new independent MPC members was in the pipeline but gave no further details.

An Economist and former Director-General of the Lagos Chamber of Commerce and Industry, LCCI, Muda Yusuf who spoke to The ICIR on the Development said external MPC members are key to making independent decisions about Nigeria’s Monetary policy issues.

“We have barely a month to the MPC meeting. I believe the nomination of other external members is key to an independent decision of the apex bank on the matter. Let’s give the President and the  Governor benefit of doubt on the nomination of external members before the February meeting date. There’s a reason for external competition of some members into the MPC to enable external and balanced perspectives to issues on monetary policy,” he said.

Notably, monetary authority is crucial to President Bola Tinubu’s efforts to boost growth and attract foreign investment to Nigeria’s lethargic economy. Soon after taking office in May, he suspended the bank’s then-governor Godwin Emefiele, who was arrested weeks later on charges including fraud. Emefiele denies wrongdoing and his trial is ongoing.

Tinubu then installed new leadership under ex-Citibank executive Olayemi Cardoso, who has pledged a return to orthodox central banking with a focus on tackling inflation, stabilizing the country’s free-falling naira currency, and delegating development banking roles to other financial institutions.

“We are committed to rebuilding an institution that is trusted and respected and promoting confidence in the economy,” Cardoso said.

The MPC consists of the governor, four deputies, and two bank directors, plus five outsiders appointed by the president and the governor. The current five external members were picked by former President Muhammadu Buhari, and former Apex Bank Governor- Emefiele.

The MPC needs six of the 12 to be present to constitute a quorum, so there’s no risk that next month’s meeting won’t be properly constituted, even if new external members have not been named by then.

    The current external members who spoke to Blomberg said that they’ve not been invited to the Scheduled meeting and don’t anticipate being there.

    Economists expect Cardoso to raise interest rates sharply in what will be the first gathering of the MPC since July when it lifted the policy benchmark to 18.75 cents. Inflation has subsequently surged and stood near a three-decade high of 28.9per cent in December.

    But if no external members of the committee are present, it will leave question marks over the possible political interference in the key monetary decisions.

    “Holding February’s MPC meeting without any independent member would likely raise questions concerning the credibility of the decision,” said Omobola Adu, an economist at BancTrust & Co. “Having external members reduces the bias that the central bank can be influenced by internal or political pressures.”

    Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.

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