What to do about a bull in a china shop? The proximate challenge is two-fold. First, clearly, is to do minimal damage to the crockery, and to the furniture, maybe. Next is to get the bull to pasture. Further term tasks would include ring fencing the facility from errant ruminants. Defined in these terms, the National Assembly’s exertions on altering the CBN Act 2007 make some sense. However, there are other narratives (no less valid) involved here. The less dramatic of these renders the problem in more prosaic terms: “How do you address the difficulties posed in any organisation by a strong chief executive officer (CEO)?” The main worry here is the possibility of the CEO subverting the organisation in pursuit of a purely private agenda. Subsidiary concerns are that stakeholders are then left with an eviscerated entity when finally the CEO’s madcap schemes implode, a la ENRON.
This, properly speaking, is a corporate governance problem. And examples from the private sector recommend a few solutions. It helps to bear in mind that the more appropriate (if we must use zoomorphic ones) metaphor in this respect is how to ensure that a lion in position of authority, remains accountable. First, is to make certain that the board (responsible in the CBN’s case for, amongst other things, consideration, and approval of the bank’s annual budget) is strong enough to serve as foil to the CEO. Often times, this task is defined as one of guaranteeing that non-executive directors (NEDs) outnumber executive directors (EDs) on the board, and shooting (in the design of the board) for a lot more “independent” directors amongst the NEDs. But essentially, the main deliverable is to see to it that (as the Revised Combined Code in the UK puts it) “no individual or small group of individuals can dominate the board’s decision taking”.
“Independence” is, however, a fraught word in this space. The CBN itself defines an “independent bank director” as “a member of the Board of Directors who has no direct material relationship with the bank or any of its officers, major shareholders, subsidiaries and affiliates; a relationship which may impair the director’s ability to make independent judgments or compromise the director’s objectivity in line with corporate governance best practices”. Still, my preferred definition of “independence” is that provided by the Securities and Exchange Committee’s (SEC) “Code of Corporate Governance for Public Companies in Nigeria”. The appeal, in this respect, is in the detail, and in the concern with the ease with which “connected” persons may be suborned.
All of this places a premium on transparency. How to make sure that compliance is not just a box-ticking enterprise. One way of letting a lot more sunlight in on any governance process, is to secure strong reporting lines to significant others. Regulators perform this role, in the private sector. In regards of the central bank, the CBN Act 2007, reserves this regulatory role to the National Assembly (to which the apex bank is duty bound, on a semi-annual basis, to report, amongst others on “efforts, activities, objectives, and plans of the board with monetary policy”). And the President (whom the apex bank must keep informed “on the affairs of the bank, including a report on its budget”). Has the apex bank been remiss in its responsibilities here? And what have these “regulators” done to correct the CBN’s ball dropping? None of these calls, yet, for a root-and-branch review of the CBN Act 2007. On the other hand, the Senate confirms enough CBN functionaries (bank directors, deputy governors, governor, members of the monetary policy committee, board members, etc.) to be in position where we can hold it responsible, under the current act, for not having provided enough checks and balances.
It would seem then, that the CBN Act 2007 is not exactly as flawed a document as the ongoing furore over its review would suggest. The major failings have been of a governance type. And the major failures have been of those vested with the exercise of oversight functions consistent with the good governance of the apex bank. However, since we are in the spirit of change, certain wordings of the act recommend themselves for immediate consideration. “Matching” can properly be defined as “spreading, scattering, or littering of any surface with any naira notes or coins and stepping thereon” only within our local pidgin English grammar. And even then it is correctly spelt “march”, itself a derivative of the English verb meaning “to move along steadily usually with a rhythmic stride and in step with others”.
Now, that will be one change worth all this effort.