RETHINKING THE CBN’S MANDATE

Nigeria can learn from Malaysia's approach to central banking, according to a recent academic study tour led by Uche Uwaleke. During the tour, Uwaleke visited Malaysia's Central Bank, Bank Negara Malaysia (BNM), and was impressed by their comprehensive mandate that includes sustainable economic growth alongside monetary stability.

Uwaleke argues that Nigeria should reconsider its CBN Act (2007) to explicitly recognize sustainable economic growth as an overarching objective, while still retaining monetary and financial stability as necessary conditions for achieving growth. This approach would not turn the CBN into a development agency, but rather establish a framework for the bank to consider how its policies can contribute to productive capacity, investment, employment, and household welfare.

The United States provides a relevant example, with the Federal Reserve operating under a dual mandate that includes price stability and maximum employment. This approach has not undermined monetary-policy credibility or central-bank independence, even in a highly developed economy with complex financial markets.

Nigeria's recent experience with development finance under the previous CBN administration also warrants consideration. While concerns about the boundaries between monetary policy, fiscal policy, and credit allocation are valid, they should not preclude the case for a framework that acknowledges the developmental implications of monetary and financial policy.

Developing economies like Nigeria face significant structural challenges, including inadequate productive capacity, limited access to finance, weak industrialization, and high unemployment. A central bank with a broader mandate may better address these issues and promote sustainable economic growth. Thus, Nigeria should seriously consider amending its CBN Act to reflect a more developmental approach to central banking.