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Central Bank of Nigeria
(Reviewed, 3rd Nov 2005)
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Website Address: http://www.cenbank.org/welcome.htm
Central Banks worldwide simply refer to a central monetary authority or an apex financial institution within the entire financial structure promoting monetary stability and a sound financial system. The world of Central Banking is one of a variety of structures, functions and powers, which are in themselves by-product of the economic, political and other realities prevailing in a society.
Historically, prior to the establishment of Central Bank of Nigeria by the CBN Act of 1958, there existed a body known as the West African Currency Board (WACB). This Board, which was established by the then British Colonial Government, was intended to serve as a Central Bank for the Anglophone West African countries. Thus, the board was charged with the primary responsibility of issuing the West African Pound, which served as the legal tender currency in Ghana, Nigeria, Sierra-Leone and Gambia.
Another function performed by WACB was the management of the reserves held in trust for these colonies. Such reserves were invested by the board on behalf of the West African countries as instruments in the London Money Market. The weakness of the board for which it was criticized is as follows:
These factors led to the widespread agitation for indigenous Central Banks in the area.
The Central Bank of Nigeria (CBN) is the apex regulatory authority of the financial system in the country. It was established by the CBN Act of 1958 and commenced operations on July 1ST, 1959. The promulgation of the CBN decree 24 and Banks and other financial institutions (BOFI) Decree 25, both in 1991 gave the bank more flexibility in regulation and supervision of the banking sector and licensing finance companies which hitherto operated outside any regulatory frame work.
The principal objectives of the bank as stipulated in the CBN Act of 1958 are as follow:
To achieve the above objectives, CBN undertakes the following functions as stated in the Act. The basic functions performed by CBN can be broadly categorized into three:
The regulatory functions of the CBN are mainly directed at the objective of promoting and maintaining the monetary and price stability in the economy. To perform this regulatory function CBN formulates policies to control the amount of money in circulation, control other banks and major players in the financial market, control rates of banks credits and therefore the supply of money in the economy. The instruments used by CBN to achieve these functions are:
The establishment of CBN in 1959 was premised on the need to promote and accelerate the much needed economic growth and development in Nigeria, which would invariably promote the growth of the financial market. This financial market comprises the Money and Capital market, assistance to development banks and institutions and the formulation and execution of government economic policies.
The Money Market is the market for mobilizing short-term funds with instruments such as Treasury Bills, Treasury Certificates, Commercial Papers, Certificate of Deposit (CDs), Eligible Development Stocks (EDS) and Bankers’ Acceptances.
The CBN plays a major role in the Capital Market, which deals with long-term funds by fostering its growth through the annual subvention granted to them.
The CBN also helps to promote and assist the development banks and institutions. These include the Nigerian Industrial Development Bank (NIDB), the Nigerian Banks for Commerce and Industry (NBCI), the Nigerian Agricultural Insurance Company ((NAIC), the Federal Mortgage Bank of Nigeria (FMBN), the Nigerian Deposit Insurance Corporation (NDIC), the Nigerian Export-Import Bank (NEXIM) and the Securities and Exchange Commission (SEC).
In addition, the CBN is involved in the formulation and execution of viable economic policies and measures for the government. Also since 1970, the bank has been instrumental in the promotion of wholly owned Nigerian enterprises. Thus, the recent directive to banks to set aside 10% of their profits before tax to finance Small and Medium Scale Enterprises can be viewed in this context.
The CBN is faced with a number of problems in the Nigerian financial sector, among these problems are as follows:
ACHIEVEMENTS, VISION & MISSION
The Central Bank of Nigeria in its bid to curb banks unethical actions have periodically increased their capital base and have instituted the Inter-bank foreign exchange market to check capital flight and to regulate foreign exchange rates.
CBN has also achieved a level of autonomy since the advent of the democratic dispensation in Nigeria, this is reflected in her aggressive execution of Government economic policies in the areas of orientating the Nigerian populace to embrace the savings culture, the encouragement of foreign investors by creating an enabling environment/policies for investment and above all the facilitation of good conduct of monetary and fiscal policies for ensuring macroeconomic stability and stable governance.
We must also acknowledge the recent moves by the Central bank to tap into the limitless opportunity derivable in the Information Technology world. This is reflected in the massive promotion of Universal Banking in the country. The CBN took the bull by the horn by first starting a restructuring and reengineering project which is perceived to tackle the business processes in its structural and institutional deficiencies to enhance its effectiveness, efficiency and productivity.
The Central Bank of Nigeria’s restructuring and reengineering involves improved reorganization of the Bank’s business processes with a view to making it more efficient and proactive. It also involves restructuring the assets and liabilities of the bank to promote efficiency, restore integrity and achieve cost effectiveness. To achieve this all important restructuring & reengineering CBN embarked on a project code named "Project EAGLES".
Project EAGLES is the approach CBN has adopted, recognizing the need to gear up it’s organization and systems to address strategic issues, achieve a sharper focus on core functions and be an efficient regulator in the 21st century.
Consequently, the vision of the CBN in the third millennium there is:
Arising from the vision the restructuring/reengineering code named EAGLES stands for the following:
The mission of Central Bank of Nigeria arising from the vision has been captured as follows:
The restructuring/reengineering framework adopted for the Project EAGLES is the Performance Driven Change methodology (PDC). This method defines and review the performance measurement set for each business process to be sure that process performance is appropriately measured.
According to Chief Joseph Sanusi the Governor of CBN, the project, which kicked off two years ago, has completed its first phase. The governing board of CBN is satisfied so far. The second phase has also been launched. This project was embarked upon due to the need to change the entire structure of the CBN with a focus towards imbibing a strong culture change using modern information technology (IT) as a springboard.
The reengineering exercise according to the Governor is intended to radically alter the way things are presently done, that is work communication and relationship both within and outside the bank, which means making significant technological changes that will pervade the whole CBN.
The CBN at present do not have a functional website.
The board of Governors of the Central Bank of Nigeria consists of the following officers:
BOARD OF GOVERNORS
Web Site Address: http://www.cenbank.org/welcome.htm
HEAD OFFICE - ABUJA
Mr. Tony Ede,
Mrs. G.N Eke
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