From Kenneth Udeh, Abuja

The Senate committee on Banking , Insurance and other Financial Institutions on Wednesday gave assurances to review the Companies and Allied Matters Act (CAMA) in order to grant additional capacity to shareholders to oversee the operations of their business investments.

The Banking committee made this known during its interactions with the board members of the Bank Directors Association of Nigeria (LTD/GTE) led by its Chairman Mr. Mustapha Chike Obi.

Mustapha while tabling its challenges bedeviling the Banking industry to the Chairman of the committee Senator Adetokunbo Abiru said that there was a need to amend the CAMA Act.

According to him the CAMA Act states that one third of all the directors of companies (banks in this case) must be independent directors but unfortunately for banks half of its directors are usually predominantly “Executive directors”. Pointing out the problem Mustapha said that if one third are selected it will imply that one third of the half are independent.

To buttress his point Mustapha made an illustration with Fidelity Bank which he said has 15 board of directors out of which 8 are Non-Executive members while 7 are Executive members.

According to him the CAMA Act is unfair to the shareholders because its specifies that five have to be independent which implies that of the eight Non-Executive, five are independent while only three are representing the shareholders.

Seeking for a review Mustapha said; “What we thought was that one third of the non-executives should be independent, not one third of all the board members should be independent. So shareholders are complaining that we only have 3 seats on the board. Five are independent and the eight are Executives.

In his response Abiru informed the Bank Directors that the Senate is currently amending the Nigerian Deposit Insurance Corporation Act (NDIC) and the Central Bank Act (CBN). He promised that the CAMA Act would be reviewed next to address the anomaly.

Abiru said; “Next is the insurance reforms which we shall go after next and we shall also review the CAMA Act. Without being partial we can’t have a situation where owners of business are being deprived of overseeing their business because of a regulation

Another problem presented by Mustapha was the inflation battle which the CBN is currently engaged in. Mustapha posited that the fight against inflation will impede GDP growth. He stressed that banks were currently saddled with meeting up with targets given to them by the Federal Government to build a One Trillion Dollar worth economy in the next eight years.

However the policies deployed by the CBN to fight inflation is the opposite of GDP growth since, the banks needed to raise capital inorder to meet up with the target of the Federal government. In his submission Mustapha asked the Senate to clearly define its Policy direction between fighting inflation or raising GDP.

He said; “The administration informed us that they want a 1 trillion dollar economy within eight years , part of that is that we have to raise more capital, because the capital we have in banks today cannot support a 1 trillion dollar economy.

“All of us are going to raise capital to meet the objective within a year or two to meet the President’s objective which we endorse. However two or three weeks ago the CBN Governor took a policy that is inflation fighting and as you know is the opposite of GDP growth so if you are fighting inflation the GDP will not grow, we need a clear direction, if we are going for inflation fighting or GDP growth.


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In his response Abiru identified two impasse between the Monetary and Fiscal Policies. According to him the policies undertaken by the Federal Government to address economic issues were very important but had negative impacts in the financial services industry of the country in terms of risk and others.

According to him the infractions between the Monetary and Fiscal Policies was responsible for slow GDP growth. Abiru stated that the problems will be addressed at completion of the amendments saying that the Senate would ensure synergy between the Fiscal and Monetary sides.

He said; “We have strengthened both the regulators and operators and that is what the committee of the Senate will continue to champion.

“I agree with you because we see today in terms of those that are managing it we can see a prioritization of the inflation target. I think on the fiscal side they need to wake up and rise up to challenge. In the amendments of the Acts we are trying to make sure that there is a handshake between the Fiscal and the Monetary.

“They need to work together whether it is the Ministry of finance or budget, Trade and Investment and others. They can’t leave the space for the Monetary authorities to drive along the corridor of their mandate which is their mandate.

Mustapha also drew attention of the committee members to the frosty relationship between the Banks and the NDIC which said will become unsustainable in the next three years.

He explained that the charges of the NDIC had become of the banka biggest issues saying that funds collected were deposited and remained idle in the coffers of the CBN.

He appealed to the Senate; “The biggest operational expense in Banks today is salaries and compensations followed closely by AMCON and NDIC laws. In the next few years AMCON, NDIC will be the biggest operational expense of banks and it’s not sustainable.

“Because as the bank assets are growing costs are growing And it’s going to be a very difficult issue. NDIC also you maybe aware charges us a premium for the funds that we have in CBN , we don’t use the money , we don’t lend the money and the money is not as risk but is sitting at CBN coffers.So we need your protection. We will cooperate and work with you.

Abiru assured of the Government and Senate’s efforts to address the issues;

“We know that the government is moving towards the right direction but their policies have distorted our macroeconomic framework earlier and it’s important that we confront it wholeheartedly.





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