History of Central Bank of Nigeria :Function and List of CBN Governors since 1958

The Central Bank of Nigeria (CBN) was established in 1958, marking a significant milestone in Nigeria’s financial history. It commenced operations on July 1, 1959, with the primary objectives of maintaining external reserves, promoting monetary stability, and acting as a banker to the federal government.

Over the years, the CBN has played a pivotal role in the country’s economic development, adapting its functions to meet the changing needs of the Nigerian economy

One of the early achievements of the CBN was the issuance of its first treasury bills in April 1960, followed by the launch of the Lagos Bankers Clearing House in May 1961. These initiatives were crucial in establishing a structured financial system in Nigeria. By July 1, 1961, the CBN had completed the issuance of new Nigerian notes and coins, replacing the West African Currency Board notes and solidifying its role in the country’s monetary system

Throughout its history, the CBN has undergone several legal reforms to enhance its autonomy and scope of operations. Notable reforms include the CBN Decrees of 1991 and the 2007 Act, which expanded its regulatory oversight and monetary policy tools. These reforms were instrumental in modernizing Nigeria’s financial systems and ensuring economic growth, particularly during periods of economic liberalization in the 1980s and 1990s

In recent years, the CBN has focused on stabilizing the Nigerian economy by implementing monetary policies that control inflation and foster price stability. It has also played a crucial role in managing foreign exchange rates and supporting economic growth by channeling credit to key sectors like agriculture and manufacturing.

These efforts have been vital in driving job creation, industrialization, and attracting foreign investments, thereby positioning the CBN as a cornerstone of Nigeria’s economic development

Also read: The history and origin of banking in Nigeria

Central Bank Act, 1958

The Central Bank Act, 1958 was the legislation that established the Central Bank of Nigeria (CBN). It laid the foundation for the bank’s operations and defined its objectives. Key highlights of the Act include:

1. Establishment of the CBN: The Act officially created the Central Bank of Nigeria, which commenced operations on July 1, 1959.
2. Currency Issuance: Empowered the CBN to issue legal tender in Nigeria.
3. Monetary Stability: Tasked the CBN with maintaining monetary stability and safeguarding the value of the Nigerian currency.
4. External Reserves Management: Directed the CBN to manage Nigeria’s external reserves to ensure economic stability.
5. Government Banker: Designated the CBN as the banker and financial adviser to the Federal Government.

The Act was later repealed and replaced by subsequent legislation, including the CBN Act of 2007, which expanded the bank’s mandate and autonomy.

CBN 1997 amendments

The CBN (Amendment) Decree No. 3 of 1997 introduced significant changes to the Central Bank of Nigeria’s operations. Key highlights include:

1. Reduced Autonomy: The amendment placed the CBN under the supervision of the Ministry of Finance, limiting its independence. The CBN became directly accountable to the Minister of Finance for its supervisory and regulatory functions.
2. Expanded Supervisory Role: The CBN’s oversight was extended to include specialized banks and other financial institutions.
3. Subjugated Role: The amendment reduced the CBN’s discretionary powers, giving the Ministry of Finance greater control over financial institutions.

This amendment was later repealed by the CBN (Amendment) Decree No. 37 of 1998, which restored some level of operational autonomy to the CBN

CBN 1998   amendments

The CBN (Amendment) Decree No. 37 of 1998 introduced significant changes to the operations of the Central Bank of Nigeria (CBN). Here are the key highlights:

1. Restoration of Autonomy: The decree repealed the 1997 amendments that had placed the CBN under the supervision of the Ministry of Finance. It restored a measure of operational independence to the CBN.
2. Board of Directors: The composition and responsibilities of the CBN’s Board of Directors were redefined, including the Governor as Chairman and four Deputy Governors.
3. Policy Formulation: The Board was tasked with formulating monetary and credit policies, approving budgets, and overseeing the general administration of the bank.
4. Reporting Requirements: The Governor was required to keep the President informed of the bank’s affairs and submit formal reports every six months.
5. Employee Appointments: The decree specified that appointments and removals of senior staff (Assistant Director and above) required Board approval.

You can also read: The Origin and History of Banking- Evolution of Bank in the world

The CBN Act, 2007

The BOFI (Amendment) Decree, 1998

The Banks and Other Financial Institutions (BOFI) Amendment Decree, 1998 introduced changes to the original BOFI Act of 1991, which governs the operations of banks and other financial institutions in Nigeria. The amendment aimed to strengthen the regulatory framework and address emerging challenges in the financial sector. Key provisions included:

1. Enhanced Regulatory Powers: The Central Bank of Nigeria (CBN) was granted additional authority to supervise and regulate financial institutions more effectively.
2. Capital Requirements: Adjustments were made to the minimum paid-up share capital requirements for banks to ensure financial stability.
3. Licensing and Operations: The amendment refined the processes for granting licenses to banks and outlined conditions for their operations.
4. Foreign Banks: Provisions were included to regulate the activities of foreign banks operating in Nigeria.
5. Penalties: Stricter penalties were introduced for non-compliance with banking regulations.

The decree was part of broader efforts to modernize Nigeria’s financial system and align it with international standards.