THE CENTRAL BANK OF NIGERIA

ESTABLISMENT, GROWTH AND FUNCTION

The West African Currency Board (WACB) was establishment in 1912 as a result of the recommendation of the EMOH committee. It was set up to cater for the finance needs of expatriates in West Africa and to introduce a common currency within the sub-region. It did not have any discretionary powers to control the currency it issued, and thus, was impotent as a monetary authority. This situation is believed to have led to agitation for the establishment of a Central Bank of Nigeria.

A central bank is a pivotal institution in any modern economy. It is important to remind ourselves about its origin as well as the functions it performs in the Nigerian economy. The Central Bank of Nigeria was established by the CBN Act of 1958.Origin and structure:The first recorded move towards the establishment of a central bank in Nigeria was in April, 1952 when a private member of the federal House of representative proposed a motion for the establishment of a central bank in Nigeria to perform those functions generally expected of England. Mr. J.L. Fisher who was commissioned in 1952 to study the possibility and practicability of establishing the bank did not favour the proposal in the immediate future. It was the World Bank mission to Nigeria in 1953 which regarded the request for a Central Bank of Nigeria expedient on both political and national grounds and therefore recommended a state Bank of Nigeria.

Subsequently, the government invited another adviser to the Bank of England Mr. Loynes in 1958 to advise it on the feasibility of establishing the bank and the recommendations made then formed the essential basis for the bank of Nigeria Act of parliament, known as the CBN Act of 1958 which established the Central Bank of Nigeria.Structurally, under the enabling Act, the policy and the general administration of the affairs and business of the Bank were the responsibilities of the Board of Directors made up of the Governor of CBN (as chairman), the Deputy Governor and five other part-time directors, all appointed by the Head of State. The Board is assisted by departmental directors who are career employees of the bank. The reorganisation in the bank’s structure, carried out in 1988, provided for an enlarged board of directors consisting of the governor, five deputy governors and five part-time directors. At present, the Board is assisted by twenty-five departmental directors in the day-to-day running of the bank.