The Nigerian Economic Summit Group (NESG) has called on President Muhammadu Buhari’s urgent intervention and amendment of the Banks and Other Financial Institutions Act (BOFIA) CAP B3 Laws of the Federation of Nigeria 2004 (Amendment) Bill, 2020, as passed by the 9th National Assembly.
The NESG, which is a non-profit, non-partisan private sector-led think-tank and policy advocacy group, said the bill needs to be amended before it receives Buhari’s assent and becomes law. In a letter dated September 1, 2020, the group said if the current bill is signed into law, it could make the domestic investment unfriendly, thereby defeating the government’s objectives of creating an enabling business environment, promoting industrialisation, increasing trade and export, and developing enterprises.
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“Your Excellency, we bring to your attention several provisions of the Bill which we believe to be contentious, draconian and inimical to government’s focus of creating an enabling business environment and level playing field attractive to both local and foreign investors,” the NESG wrote in the letter addressed to President Buhari.
The Nigerian Senate had passed the bill to amend the banking legislation on July 22nd. The bill was subsequently passed by the House of Representatives and harmonised by both legislative chambers before it was sent to the president.
Among the contentious areas of the bill is a section that grants the governor of the Central Bank of Nigeria (CBN) absolute powers to refuse to issue a banking licence without providing any reasons to the applicant. The NESG said the investment community would consider such powers as arbitrary and liable to abuse.
In addition, Section 12(6) of the bill attempts to whittle away the power of the court to grant restorative or similar orders against the CBN or its governor in any action in relation to the revocation of a banking licence. The bill limits a claimant’s remedy to only damages or monetary compensation. Such a law, according to the NESG, could discourage investment in the banking sector.
Section 51 of the bill grants immunity to the federal government, the CBN, and any government or CBN official, from any claim or liability in respect of anything done in the exercise of their duties under the bill, or in accordance to any other relevant laws.
The bill extends the regulatory oversight of the CBN to any company that receives deposits from the public even when it does not conduct banking business. Specifically, companies that collect money either as deposit for shares or loan notes would be considered to be conducting banking business and, as a result, would come under the regulatory oversight of the CBN.
Section 57(1) and (2) of the bill attempts to appropriate to the CBN responsibilities already within the regulatory purview of other agencies such as the Securities and Exchange Commission (SEC) and the Corporate Affairs Commission (CAC). The NESG said this section amounts to an overreach by the CBN, and could lead to inter-agency conflict, duplication of regulations and stifling the ease of doing business in the country.
Hence, the NESG attached to its letter to the president suggestions on how the contentious provisions should be amended.
The bill was sponsored by Senator Uba Sani, Chairman, Senate Committee on Banking, Insurance and other Financial Institutions, and Senator Betty Apiafi. During its introduction at the Senate on May 12, 2020 and throughout the legislative process, it was touted as a proposed legislation that aims to strengthen the legal framework for the regulation of the country’s banking industry, among other provisions.
It also reportedly sought to enhance efficiency in the process of obtaining and granting banking licences. If signed into law, the legislation would amend the existing banking legislation that was first enacted in 1991.