Meffy's on a roll
Dear readers, welcome to the month of March!! With the new month, we recognize another new CBN policy.
Ever had key deliverables and allowed procrastination get the best of you? There’s something somewhat similar between that last minute burst of energy and ideas that eventually gets the job done with stellar accolades received and what we have seen the Nigerian Central Bank Governor do. The results of his back-to-back “last minute” policies may not entirely be getting stellar accolades, but such faults can not necessarily be placed on the policymaker but on the system in which these policies are rolled out.
Off the top of your head, when you think of Emefiele, you probably think about the current scarcity of cash, but if such policy is analyzed separately, it can be said that it is a step in the right direction of development. But policies, no matter how well thought out, need to have certain economic structures and frameworks in place for them to generate the appropriate impact. Financial inclusion is one of the major goals he has pushed for, and data shows that the percentage of this measure has not been attained. Last year, the percentage stood at 61% against the goal of 91%. This just goes to show the lack of systems and structures that would have been fundamental to the smooth takeoff of his ever-so-important cashless policy.
Here’s a more recent policy which was geared towards the banking industry, particularly the governing bodies of these institutions. On February 24th, 2023, a circular from the director of financial policy and regulation department was sent to all Deposit Money Banks on the review of the tenure of executive management and non-executive directors of deposit money banks in Nigeria. This review addresses the tenure of members of governing boards of deposit banks. It is aimed at strengthening governance practices in the banking industry. It places structures around the length of time executives can remain in these positions and also provides opportunities for growth and advancement in the corporate ladder for junior members. These circular addresses issues around economic structures and systems. It seeks to strengthen best practices in the financial space that would allow for the effectiveness of policies that are geared toward this industry.
So what?
This new policy has the likelihood of hastening succession planning in the Nigerian banking sector. It also provides a firmer term limit as the specified tenure is not just enforced by a financial institution’s policy but by the governing body of all financial institutions, the Central Bank. This is needed as most deposit money banks are moving from being private firms to holding companies and such structures and regulations are required to be built to prevent issues of fraud, lack of transparency, conflict of interests, and many more threats to corporate governance.