CBN Seeks to Replace External MPC Members Ahead of February Meeting

James Emejo in Abuja

Ahead of its maiden Monetary Policy Committee (MPC) meeting since last year when its Governor and Deputy Governors were appointed, the Central bank of Nigeria (CBN), plans to replace the five external members of the 12-member MPC.

The move came amid ongoing reforms embarked upon by the CBN Governor, Mr. Olayemi Cardoso since assuming office last September.

A CBN source has also confirmed that the appointment of new independent MPC members was underway.

According to Bloomberg, four external members who spoke on condition of anonymity, lamented their alleged exclusion, adding that they had not been paid by the bank since August. The fifth member did not respond to requests for comment.

The aggrieved members further alleged communication gap with the central bank, pointing out that they last heard from the apex bank in September and have been apparently excluded from the usual planning ahead of the February 26th and 27th MPC meeting.

The MPC consists of the governor, four deputies and two bank directors, plus five outsiders appointed by the president and the governor.

The current five external members were picked by former President Muhammadu Buhari, and former CBN Governor, Mr. Godwin Emefiele.

The committee requires six of the 12 to be present to constitute a quorum.

So, if no external members of the committee are present, it would leave question marks over the policy process.

The current external members who spoke to Bloomberg said they’ve not been invited to the meeting and don’t anticipate being there.

An economist at BancTrust & Co., Omobola Adu, said, “Holding February’s MPC meeting without any independent member would likely raise questions concerning the credibility of the decision.

“Having external members reduces the bias that the central bank can be influenced by internal or political pressures.”

THISDAY gathered that it was unlikely that the tenure of the affected MPC members had elapsed especially given that the new leadership of the apex bank had indicated its preference to inject new manpower since inception.

After initial postponements, the central bank had tentatively fixed its first MPC meeting since the appointments of the CBN Governor, Cardoso and the Deputy Governors last year, for February 26th and 27th, 2024.

Ahead of the meeting, the CBN in a statement by the Acting Director, Corporate Communications Department, Mrs. Hakama Sidi Ali, disclosed that the apex bank held a two-day strategic session for members of the MPC, preparatory to their first meeting under the tenure of Cardoso.

However, there had been questions over its Board constitution and the tenure of previous MPC members, which reportedly expired last year – and if the CBN governor and his deputies are enough to form a quorum for the meeting that among other mandates, is responsible for making interest rate decisions and determine appropriate stance of policy in the short to medium term.

Section 12 (1) of the CBN Act 2007, categorically states that: “In order to facilitate the attainment of the objective of price stability and to support the economic policy of the federal government, there shall be a Committee of the Bank known as the MPC.

(2) The MPC shall consist of- (a) the Governor of the Bank who shall be the Chairman;

(b) the four Deputy Governors of the Bank;

(c) two members of the Board of Directors of the Bank;

(d) three members appointed by the President; and

(e) two members appointed by the Governor.

(3) The MPC shall have responsibility within the Bank for formulating monetary and credit policy.

(4) The appointment of a member of the MPC pursuant to Sub-section 2 (d) and (e) of this section, the remuneration, filling of temporary vacancies, qualification, tenure of office and disqualification shall be subject to the same terms as are stipulated for a Director under sections 10 and 11 of this Act.

Presently, apart from the CBN Governor and the four deputy CBN governors, the other seven members of the committee as stipulated by the CBN Act, have not been appointed.

Furthermore, Ali in the statement, had disclosed that the strategic session was aimed to brainstorm and engage in an in-depth discussion about the committee’s objectives.

She had revealed that the critical focus areas during the retreat included deliberations on the strategic plan to effect necessary improvements in the monetary policy transmission mechanism.

According to her, the sessions were facilitated by former MPC members, monetary policy communication specialists at the IMF, and Directors of Departments critical to the MPC process.

“The valuable insights gained from these discussions will significantly contribute towards the robustness of the forthcoming MPC meetings,” she noted.

The committee held its last meeting in July 2023, when the benchmark interest rate was raised by 25 basis points to 18.75 per cent from 18.50 per cent.

According to the “MPC Meetings Tentative Calendar for 2024,” which was posted on the apex bank’s website, a total of six meetings had been slated to hold in the year.

The calendar of meetings on the CBN website indicated that the meetings was scheduled for February, March, May, July, September and November 2024.

Precisely, the first is slated for February 26 and 27, 2024; the second for March 25 and 26; and the third meeting for May 20 and 21.

The fourth MPC meeting is billed for July 22 and 23; fifth for September 23 and 24 as well as November 25 and 26 for the last meetings.