Sunday Aborisade in Abuja
The Senate committee on Banking, Insurance and other Financial Institutions yesterday, assured stakeholders in the banking and financial sectors that the Companies and Allied Matters Act (CAMA) would be further reviewed in order to grant additional capacity to shareholders to oversee the operations of their business investments.
He said the CAMA Act amendment would complement ongoing amendment to the Nigerian Deposit Insurance Corporation (NDIC) Act and the Central Bank (CBN) Act
The Chairman of the Senate panel, Senator Tokunbo Abiru, gave the assurance when members of the committee interacted with the board members of the Bank Directors Association of Nigeria led by its Chairman Mr. Mustapha Chike Obi, who paid his committee, a courtesy visit.
Mustapha, had while tabling the challenges bedeviling the banking sector to the panel, stressed the need to further amend the CAMA Act.
He said the current CAMA Act stipulated that one-third of all the directors of companies (banks in this case) must be independent directors.
Unfortunately, he said half of the bank directors were usually predominantly “executive directors”.
He pointed out that if one-third was selected, it would imply that one-third of the half are independent.
To buttress his point Mustapha made an illustration with Fidelity Bank which he said has 15 board of directors out of which eight are non-executive members while seven are executive members.
Mustapha said the CAMA Act was currently unfair to the shareholders because its specified that five directors have to be independent.
He said the implication of this was that, “of the eight non-executive, five are independent while only three are representing the shareholders.”
Mustapha said, “What we thought was that one-third of the non-executives should be independent.
“We are not talking of the one third of all the board members should be independent.
“So shareholders are complaining that we only have three seats on the board. Five are independent and the eight are Executives.”
Responding to the concerns of the Bank Directors, Abiru said the Senate was currently amending the NDIC and the Central Bank Act (CBN).
He pledged that the CAMA Act would also be reviewed after the amendment to the NDIC and CBN Acts to address the anomaly.
Abiru said, “Next is the insurance reforms which we shall go after and we shall also review the CAMA Act.
“Without being partial we can’t have a situation where owners of business are being deprived of overseeing their business because of a regulation”
Another challenge presented by Mustapha was the inflation battle which the CBN was currently tackling.
He noted that the fight against inflation could impede GDP growth.
He noted that banks were currently saddled with meeting up with targets given to them by the federal government to build a $1 trillion economy in the next eight years.
He said the policies deployed by the CBN to fight inflation might affect GDP growth.
This he said, was because the banks needed to raise capital in order to meet up with the target of the federal government.
Mustapha asked the Senate to clearly define its policy direction between fighting inflation or raising GDP.
He said, “The administration informed us that they want a $1 trillion economy within eight years, part of that is that we have to raise more capital, because the capital we have in banks today cannot support a $1 trillion economy.
“All of us are going to raise capital to meet the objective within a year or two to meet the President’s objective which we endorse.
“However two or three weeks ago the CBN Governor took a policy that is inflation fighting and as you know it is the opposite of GDP growth.”
Abiru, while commenting on the concerns raised by Mustapha, identified two impasses between the monetary and fiscal policies.
He the policies undertaken by the federal government to address economic issues were important to save the nation’s economic growth.
Abiru stated that the issues would be addressed at completion of the amendments.
He said the Senate would ensure synergy between the fiscal and monetary authorities.
He said; “We have strengthened both the regulators and operators and that is what the committee of the Senate will continue to champion.”
