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Nigerian Lawmakers Propose Bill to Curb Central Bank's Role in Economic Policy

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Griffith Sarah

Jun 1, 2024

This proposal comes as Nigeria grapples with a 28-year high inflation rate of 33.69% in April

Some economists said that adding a committee to coordinate monetary and fiscal policies could severely weaken the central bank. The proposal is so far backed by 32 members of the ruling party and the bill would need to be approved by the Senate and then President Bola Tinubu's signature to become law. The government has not given its view on the bill yet.
Abuja-based economist Kelvin Emmanuel.

Nigerian lawmakers are proposing a bill to limit the central bank's control over economic policy. The bill, currently in the Senate, seeks to establish a committee headed by the finance minister to coordinate monetary and fiscal policies.

This proposal comes as Nigeria grapples with a 28-year high inflation rate of 33.69% in April, amid sluggish economic growth and currency issues. The central bank would still manage monetary policies, but the new committee would oversee the coordination of both monetary and fiscal policies.

Economists warn that this could undermine the central bank's autonomy.

"The federal government tampering with the central bank's autonomy could disrupt monetary policy," said Abuja-based economist Kelvin Emmanuel.

The International Monetary Fund has also cautioned Nigeria against compromising the central bank's independence, highlighting potential risks to inflation control and economic stability.

The bill, backed by 32 ruling party members, requires Senate approval and the President's signature to become law. The central bank governor’s term would change to a single six-year term, instead of two five-year terms. Godwin Emefiele, the previous governor, faced criticism for currency restrictions that impacted the economy.

Additionally, the bill proposes reducing temporary advances from the central bank to the government, which were increased during Muhammadu Buhari's presidency.

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