Nnanna supports Nigerian banks independence

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Nnanna supports Nigerian banks independence

December 10, 2012

 Dr. Joseph Nnanna
Dr. Joseph Nnanna

The expertise in corporate governance and board independence of Dr. U. Joseph Nnanna, assistant professor of business at Northwestern Oklahoma State University, was instrumental in making the case for the Nigerian Central Banks independence.

Nnanna and his father, Dr. O. Joseph Nnanna, an economist, recently wrote and presented a paper titled, “The Imperative of Central Bank Independence: An analytical framework,” at the annual seminar organized by the Central Bank of Nigeria for Finance Correspondents and Business Editors at the Royal Park Lane Hotel and Suite in Nigeria.

Dr. O. Joseph Nnanna has more than 30 years of experience working in the International Monetary Fund, The Central Bank of Nigeria and The West African Monetary Institute. Currently, he is an economic consultant advising numerous institutions around the globe.

Due to the broad reception of their paper, the House of Rep. Joint Committee on Banking, Currency and Justice called the authors to present the paper to the public hearing in Respect of the Proposed Amendment to the Central Bank of Nigeria Act, 2007.

In summary, the authors called for the independence of the Central Bank of Nigeria (CBN) and the need for a legislative oversight that is focused on ensuring that the macroeconomic targets set by the bank are met. In this regard, the authors asserted that the legislative oversight should be carried out ex post, (not ex ante) as envisaged in the Fiscal Responsibility Act of 2009. Ultimately, the authors recommended that the CBN Act of 2007 be enshrined in the Constitution of the Federal Republic of Nigeria so as to make it irreversible at short notice by the politicians.

“My academic background is in corporate governance,” Nnanna said. “In fact, my dissertation topic was on the corporate governance of banks in the US and Nigeria pre and post the financial crisis.”

Essentially, Nnanna was examining if good corporate governance translates to long-term financial performance and sustainability. The legislators in Nigeria were in the process of stripping the Central Bank of its independence. He explained that before any policies can be approved and implemented in the country, the bank would have to obtain legislative approval.

“In order to prevent this, the bank executives asked me and my father to make a case for the Central Bank to remain independent,” Nnanna said.

By the end of the year, the Nigerian House of Rep. will vote and subsequently approve the recommendations provided by the Nnannas.