The Managing Director/Chief Executive Officer, Maxifund Investments and Securities Limited, Mr. Okechukwu Unegbu, has advised members of the National Assembly not to remove the CBN’s autonomy.
Unegbgu, who was a former president of the Chartered Institute of Bankers, Nigeria (CIBN), warned that amending the CBN Act would distort the system.
He made these remarks at the Zenith Bank sponsored Finance Correspondents Association of Nigeria (FICAN) bi-monthly forum that was held mid-week in Lagos. He spoke on the topic: “Banks’ Financial Performance in 2011 and Q1 2012: Implication for the Capital Market”.
He continued: “Why is the National Assembly trying to amend the CBN Act? The reason and only reason is because there is one strong character that had taken them on. We should be thinking of building strong institutions, so that anybody who gets there, whether the person is weak or strong, will continue to evolve in the system.
“We wrote a memo to the National Assembly, telling them that it is not right to do that. We fought for the financial and instrument autonomy of the CBN and so people cannot just destroy it. They are doing that because they have seen Lamido Sanusi as being too vocal and too strong to contend with them, therefore they want to cut his power, not thinking of the danger it will cause to the financial system. In going after Sanusi, they are trying to destroy the central bank, which should not happen”, he said.
In another development, he said the banking industry and capital market should compete, complement each other and therefore co-evolve within the financial system because that is the only way they can help the economy.
He said the financial regulations have to be reviewed, arguing that regulators need a rethink about the system. The financial regulation coordinating committee should always be thinking about cooperation.
“The capital market was very strong prior to 2008 and they were doing things as if they existed alone in a system where there are so many other contending financial institutions or financial markets. As at that time, everybody was making money and forgot that in making money, there is what we call financial friction, and this is what happens between the banking sector and the capital market.
Now, while the banking system has a lot of investable instruments, the capital market has few instruments. We only know about shares and stocks. This is because of the imperfect information in our system. Both the banking system and capital market lack information, thus it is impossible for banks to lend.