The Senate Committee on Banking, Insurance and Other Financial Institutions has pledged to examine the Companies and Allied Matters Act to provide shareholders with more authority to supervise their business investments.
During its discussion with the board members of the Bank Directors Association of Nigeria, led by Chairman Chike Obi, the committee conveyed this intention.
Obi, when outlining the challenges facing the banking industry to committee chairman Senator Adetokunbo Abiru, highlighted the necessity of amending the CAMA Act.
He mentioned that the CAMA Act requires one-third of all directors of companies (specifically banks) to be independent, but in the case of banks, half of the directors are usually predominantly “Executive directors.”
He pointed out that the CAMA Act is unfair to shareholders because it mandates that five directors must be independent, which means that out of the eight Non-Executive directors, five are independent while only three represent the shareholders.
Obi expressed that they believed one-third of the non-executives should be independent, not one-third of all the board members.
He stated, “Shareholders are unhappy that we only have three seats on the board. Five are independent, and the eight are Executives.”
In response, Abiru informed the bank directors that the Senate is presently amending the Nigerian Deposit Insurance Corporation Act and the Central Bank Act.
He also assured that the CAMA Act would be revised next to address the inconsistency.
Abiru stated, “Next, we will pursue insurance reforms and review the CAMA Act. It is unfair for business owners to be prevented from overseeing their business due to a regulation.”
Another concern raised by Obi was the ongoing battle against inflation by the CBN.
Obi suggested that the fight against inflation would hinder GDP growth.
He emphasized that banks were currently tasked with meeting targets set by the Federal Government to build a One Trillion Dollar economy in the next eight years.
He explained, “The government wants a 1 trillion dollar economy within eight years, and for that, we need to raise more capital because the current bank capital cannot support it.
He added, “We all need to raise capital to meet the President’s objective within a year or two. However, a few weeks ago, the CBN Governor introduced a policy to fight inflation, which contradicts GDP growth. We need a clear direction on whether we are prioritizing inflation-fighting or GDP growth.”
In response, Abiru identified two conflicts between Monetary and Fiscal Policies.
He emphasized that the policies implemented by the Federal Government to address economic issues were crucial but had adverse effects on the financial services industry in terms of risk and other factors.
He said that the conflicts between the Monetary and Fiscal Policies were the reason for slow GDP growth. Abiru mentioned that the issues will be dealt with when the amendments are completed and that the Senate will ensure cooperation between the Fiscal and Monetary aspects.
He remarked, “We have empowered both the regulators and operators, and that is what the Senate committee will continue to support.
“I agree with you because we currently see a focus on the inflation target by those managing it. I believe that on the fiscal side, they need to wake up and meet the challenge. In the amendments of the Acts, we are working to ensure cooperation between the Fiscal and the Monetary.
“They need to collaborate, whether it is the Ministry of Finance or Budget, Trade and Investment, and others. They should not allow the monetary authorities to operate within their mandate without cooperation,” Abiru added.