Central Bank of Nigeria

Central Bank of Nigeria
source
Bank name	Central Bank of Nigeria
Image title 1	Logo
Established	01 July 1958
Headquarters	Abuja, FCT
President	Olayemi Cardoso
Country	Nigeria
Currency	Nigerian naira
Currency iso	NGN
Borrowing rate	26.25%
Reserves	$33.83 billion (2024)
Website	https://www.cbn.gov.ng

Central Bank of Nigeria. The Central Bank of Nigeria is the premier financial institution and apex monetary authority for the Federal Republic of Nigeria. Established in 1958 and commencing operations in 1959, it was created following the recommendation of the J. L. Fisher commission to manage the national currency, formulate monetary policy, and maintain financial system stability. The bank plays a pivotal role in the Nigerian economy, acting as banker to the federal government and as a lender of last resort to the nation's commercial banks.

History

The establishment was recommended by the G. D. Paton report of 1952 and later the J. L. Fisher report, leading to the enactment of the Central Bank of Nigeria Act 1958 by the British Parliament. It began operations on July 1, 1959, under its first indigenous Governor, Roy Fenton, who was succeeded by Alhaji Aliyu Mai-Bornu. A key early task was managing the transition from the West African pound to the Nigerian pound and later introducing the Nigerian naira in 1973. Major legislative milestones include the Central Bank of Nigeria Decree No. 24 of 1991 and the subsequent Central Bank of Nigeria Act, 2007, which expanded its autonomy and mandate. The bank's headquarters moved from Lagos to Abuja in the early 1990s following the relocation of the federal capital.

Functions and responsibilities

Its core mandates, as outlined in the Central Bank of Nigeria Act, 2007, include ensuring monetary and price stability, issuing legal tender currency, maintaining external reserves to safeguard the international value of the Naira, promoting a sound financial system, and providing economic and financial advice to the Federal Government of Nigeria. It acts as banker and financial adviser to the government, manages the country's foreign exchange, and oversees the Nigerian Payments System. The bank also implements development finance initiatives through interventions in sectors like agriculture and small and medium enterprises.

Organizational structure

The bank is governed by a Board of Directors, chaired by the Governor, who is also the chief executive officer. The board includes Deputy Governors overseeing key directorates such as Economic Policy, Operations, Financial System Stability, and Corporate Services. Key operational departments include the Banking Supervision Department, the Monetary Policy Department, and the Trade and Exchange Department. The bank maintains a network of branches across the country, including in major cities like Lagos, Port Harcourt, and Kano, and has several subsidiary institutions, including the Nigeria Inter-Bank Settlement System and the College of Banking and Financial Studies.

Monetary policy and financial stability

The primary objective of its monetary policy is to maintain price stability, with a focus on controlling inflation. The main policy tool is the Monetary Policy Rate, which is set by the Monetary Policy Committee at its bi-monthly meetings. The bank employs open market operations, cash reserve requirements, and liquidity ratios to manage money supply and influence interest rates. It is responsible for regulating and supervising deposit money banks, discount houses, and other financial institutions to ensure the resilience of the Nigerian financial system. It also administers the Asset Management Corporation of Nigeria to resolve non-performing loans.

Governors

The Governor is appointed by the President of Nigeria and confirmed by the Senate. Notable governors include its first, Roy Fenton (1958–1963), and the first Nigerian Governor, Alhaji Aliyu Mai-Bornu (1963–1967). Other significant figures are Clement Isong (1967–1975), Abdulkadir Ahmed (1982–1993), Joseph Sanusi (1999–2004), and Chukwuma Soludo (2004–2009). Sanusi Lamido Sanusi served from 2009 to 2014 before being appointed the 14th Emir of Kano, and Godwin Emefiele had a tumultuous tenure from 2014 to 2023. The current Governor, appointed in 2023, is Olayemi Cardoso.

Controversies and challenges

The institution has faced significant controversies, including the prolonged detention and corruption charges against former Governor Godwin Emefiele following his suspension by President Bola Tinubu. Its management of the foreign exchange market has been frequently criticized, leading to multiple naira devaluations and a persistent parallel market premium. A controversial naira redesign policy in 2022 caused widespread cash shortages and economic disruption. Other challenges include managing high inflation rates, sovereign debt levels, and ensuring the stability of the Nigerian banking sector amidst periodic crises, such as those that led to the establishment of the Asset Management Corporation of Nigeria.

Category:Central banks Category:Economy of Nigeria Category:1958 establishments in Nigeria