CBN’s statutory autonomy, powers of the National Assembly and the rule of law By Jiti Ogunye

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The writer argues that the CBN does not have absolute powers under its CBN Act as claimed by some.On Tuesday, September 18, 2012, the two Houses of the National Assembly (NA) passed resolutions stopping the planned introduction of N5, 000.00 note and general restructuring of Nigeria’s currency notes by the Central Bank of Nigeria (CBN). The NA referred the currency notes issuance and restructuring to its committees for investigation. Since then, many commentators have argued that the NA has no power to pass those restraining resolutions’ that the executive powers of the President are being usurped, and that the resolutions are merely advisory, lacking the force of law.It is argued that the CBN enjoys “statutory autonomy” and “independence”, under the CBN Act, No. 7 of 2007 (Fed. Rep. of Nig. Official Gazette No.55 Vol. 94 of 1st June 2007), in order to ensure the Bank’s effectiveness in the discharge of its mandate. We are told that this statutory autonomy accords with international best practices regarding the structure, corporate governance and operations of central (national) banks worldwide. Recently, when the NA “threatened” to amend the CBN Act and drain it of the provisions that “safeguard” this “statutory autonomy”, many Nigerians, economists and non-economists alike, kicked, in the fear that that legislative step could be counter-productive. Many “banking and financial experts” were lined up during the public hearing conducted by the NA in stout, loud and truculently partisan defence of the CBN’s “statutory autonomy.”

A careful reading of the provisions of the CBN Act reveals, however, that the so-called statutory autonomy therein does not make it immune to the exercise of legislative powers of the NA. The CBN Act was made by the NA and can be amended by it. And when its provisions are read together with the provisions of the 1999 Constitution (Const.), as amended, it becomes clearer that the CBN’s “statutory autonomy” is not absolute.

First, let us discuss the provisions of the CBN Act on which the claim of the CBN’s untrammeled “statutory autonomy” is anchored.

Section (S) 1 (3) of the Act  provides 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.”

S. 6(3) of the Act states that  “the Board ( of Directors of the CBN) shall be responsible for (a) the consideration and approval of annual budget of the Bank, (b) the approval of the audited and management accounts and the consideration of the management letter from the external auditors, (c) the formulation and implementation of the exchange rate policy, and (d) making recommendation to the President for the appointment of auditors in accordance with S. 49 of the Act, the provision of the necessary facilities and the rate of remuneration.”

S. 17 of the Act provides that “the Bank shall have the sole right of issuing currency notes and coins throughout Nigeria, to the exclusion of the Federal, State or Local Governments or any person or authority.

S.18 ( a & b) of the Act states that “ the Bank shall arrange for the printing of currency notes and the minting of coins; and issue, re-issue and exchange currency notes and coins at the Bank’s offices and at such agencies as it may, from time to time, establish or appoint.”

S.19 (1) (a& b) and (2)  of the Act states that “the currency notes and coins issued by the Bank shall be (a) in such denominations of the naira or fractions thereof that shall be approved by the President on the recommendation of the Board, and (b) of such forms and designs and bear such devices as shall be approved by the President on the recommendation of the Board;  ( 2) the standard weight and composition of coins issued by the Bank and the amount or remedy and variation shall be determined by the President on the recommendation of the Board.”

S. 49 (1&2) states that “the accounts of the Bank shall be audited by the auditor(s) appointed in accordance with the provisions of S. 6 of this Act; and (2) the Auditor-General of the Federation shall conduct an examination of the accounts of the Bank and submit a report thereon ( to the NA under S. 85 of the Const.) relating to the issue, re-issue, exchange and withdrawal of currency notes and coins by the Bank and the Bank shall provide all necessary facilities for the purpose of the examination”.

S. 51 of the Act provides that “the Board shall have power to make and alter rules and regulations for the good order and management of the Bank” And

S. 52(1) of the Act provides that “neither the Fed. Govt. nor the Bank nor any officer of that Govt. or Bank shall be subject to any action, claim or demand by or liability to any person in respect of anything done or omitted to be done in good faith in pursuance or in execution of or in connection with the execution or intended execution of any power conferred upon that government, the Bank or such officer by this Act”

The rule of law, as formulated in several decided cases on interpretation of provisions of statutes, is that the provisions of a statute are not read in isolation of one another, but construed together in order to bring out the intendment of the law-giver.  And so, the above sections of the Act must be read together with Sections 8 and 50 of the Act.

S.8(4) of the Act provides that “the Governor ( of the CBN) shall appear before the NA at semi-annual hearings as specified in subsection 5 regarding-: (a) effort, activities, objectives and plans of the Board with monetary policy, and (b) economic development and prospects for the future described in the report required in subsection 5(b) of this Section.

S. 8(5) of the Act provides that “the Governor (of the CBN) shall from time to time (a) keep the President, informed of the affairs of the Bank, including a report on its budget and, (b) makes a formal report and presentation on the activities of the Bank and the performance of the economy to the relevant committees of the NA.”

S. 50 (1-2) of the Act provides that “the Bank shall, within two months after the close of each financial year transmit to the NA and the President a copy of its annual accounts certified by the auditor; and a report required to be submitted to the NA and the President shall be copied by the Bank in such manner as the Governor may direct.”

As we have seen, under Ss. 8 (4&) and 50 (1&2) of the Act, it is mandatory for the Governor of the CBN to appear before the NA, discuss the Bank’s objectives and plans, and submits reports to it. So, when the CBN Governor performs or fails to perform this statutory duty, what does the NA do? Take a briefing during an appearance, or take a report and archive it, and do nothing? More directly, did the CBN Governor discuss its new currency note plans with the NA, as mandated by the Act, before flagging off the project? If he did, did the NA approve of it? If he did not should the NA keep quiet, as if the NA has no say?

The Constitution is the ground norm (basic law) of Nigeria, and all other laws, including the CBN Act, are subject to its provisions. If any other law is inconsistent with the provisions of the Constitution, the Constitution shall prevail, and that other law shall to the extent of the inconsistency be void (Section. 1).  When the relevant provisions of the Constitution are construed, it becomes more obvious that the “statutory autonomy” being claimed cannot prevail over constitutional provisions. Not in Nigeria. Not in any decent representative government anywhere. The NA has the power to legislate for Nigeria, and check and balance the federal executive branch of government, in accordance with the principle of checks and balances, which tames the rigidity of the doctrine of separation of powers in a presidential system of government.

S. 88 (1&2) of the Constitution provides that “subject to the provisions of the Const, each House of the NA shall have power by resolutions … to direct or cause to be directed an investigation into (a) any matter or thing with respect to which it has power to make laws; and (b) the conduct of affairs of any person, authority, Ministry or government department charged, or intended to be charged, with the duty of or responsibility for- (i) executing or administering laws enacted by the  NA and (ii) disbursing or administering moneys appropriated or to be appropriated by the NA; (2) The powers conferred on the NA under the provisions of this Section are exercisable only for the purpose of enabling it to- (a) make laws with respect to any matter within its legislative competence and correct any defects in existing laws; and (b) expose corruption, inefficiency, or waste in the execution or administration of laws within its legislative competence and in the disbursement or administration of funds appropriated by it.”

Now, the exclusive legislative powers of the NA are listed under the Exclusive Legislative List contained in the 2nd Schedule to the Const. Items 6 and 15 thereof are “Banks, banking, bills of exchange and promissory notes”; and “Currency, coinage and legal tender”. Obviously, therefore the CBN’s N5, 000.00 currency note issuance is within the legislative competence of the NA into which the NA can cause an investigation and over which it can pass resolutions.

S. 52 (1) of the CBN Act appears to be a clause ousting the power of judicial review over the activities of the CBN. If this interpretation is correct, then Section 52(1) is null and void, having regards to the provision of S.4 (8) of the Constitution, which provides that “…the exercise of legislative powers by the NA…. shall be subject to the jurisdiction of courts of law and of judicial tribunals established by law, and accordingly the NA… shall not enact any law, that ousts or purports to oust the jurisdiction of a court of law or of a judicial tribunal established by law.”

We submit that the exercise of powers contained in the CBN Act is subject to the power of the Courts. S.6 (6) (b) of the Constitution says that “the judicial powers of the Federation shall be vested in the courts…and shall extend to all matters between persons, or between government or authority and to any person in Nigeria and to all actions and proceedings relating thereto, for the determination of any question as to the civil rights and obligations of that person.” Under S. 251(1) (d) of the Const, the Federal High Court has an exclusive jurisdiction in civil cases and matters “connected with or pertaining to banking, banks, other financial institutions, including any action between one bank and another, any action by or against the CBN arising from banking, foreign exchange, coinage, legal tender, bills of exchange, letters of credit promissory notes and other fiscal measures

From the foregoing, it is plain that contrary to the misconception of its provisions, by a lot of people, the CBN Act, in spite of its authoritarian language, does not grant the CBN absolute autonomy. Activities of the CBN are subject to legislative oversight and judicial review. The functions, duties and operations of the CBN are not immune to ultimate legislative intervention, when necessary and desirable. The CBN is not a republic or an autonomous territory within the Federal Republic of Nigeria. The ultimate manager of the Nigerian economy under the Constitution is the Nigerian State (S. 16).

The proponents of CBN’s absolutism in our monetary system must be asked what is happening currently to the statutory autonomy and independence of the national (central) banks of Greece, Portugal, Italy and Spain, under the interventionist, salvage mission of  EU bail-outs, or what happened to the statutory autonomy and independence of the Federal Reserve Bank in the US, when the US Congress  intervened to save American Banks considered as too big to fail, and the auto industry from virtual collapse.

The Nigerian economy is an integrated system. It is not a compartmentalised, CBN economy under the aristocratic sandals of CBN emperors. Unelected bankers and their collaborators in the Economic Management Team, a body that is unknown to any law, should not be the sole deciders of our monetary destiny, without any form of accountability whatsoever. That will not be democracy but dictatorship.

When in 2008, Chukwuma Soludo floated his naira re-denomination exercise, only an emphatic no from President Yar’Adua put paid to the idea. Unlike now, there were no resolutions from the NA; yet, in the face of these resolutions, it is being argued that the CBN and the President can go ahead because legislative resolutions lack the force of law – as if the NA’s resolutions on the doctrine of necessity that catapulted Dr. Goodluck Jonathan to an acting presidency in 2009 also did not “lack the force of law.”

Recently, the President, at a public function, complained about dictation by the NA to the Executive on budget preparation and implementation, stating that, sometimes, the Executive was so peeved that it considered resorting to the Court for the judicial interpretation of the scope of, and limits to the powers of the legislature over the Budget. Maybe, we have reached the stage when the NA should resort to litigation in the Supreme Court, under Section 1(1) (a) of the Supreme Court (Additional Original) Jurisdiction Act, Cap S16, LFN, 2004 if its resolutions and laws continue to be ignored by a Presidency that now appears more imperial than republican. The rule of law may thereby be enriched.

Ogunye is Principal Counsel, Jiti Ogunye Chambers, Lagos Nigeria