Victor EzejaAs reactions continue to trail the decision of the Central Bank of Nigeria (CBN) to relocate some of its departments from Abuja to Lagos, some economic experts have averred that it is a step in the right direction aimed at ensuring effective oversight of commercial banks and other financial institutions by the apex bank.
Prime Business Africa reports that CBN recently announced plans to relocate some departments to Lagos, the commercial capital of the country, citing reasons of cutting costs, staff safety, increased productivity, and the need to decongest its head office in Abuja.
Join our WhatsApp ChannelThe CBN departments slated for relocation to Lagos include Banking Supervision, other financial institutions supervision, consumer protection department, payment system management department, and financial policy regulations department.
According to reports, over 1,500 CBN staff will be relocated to Lagos to resume work by February 2.
The plan has been opposed by those who said it would create a negative impact including regional economic disparity among others. Some who viewed the move with a political lens, argued that CBN shouldn’t move those key departments away from Abuja being the federal capital territory.
However, speaking during a Twitter Space organised by Prime Business Africa on Tuesday, 30 January 2024, former Economist and Head of Investor Relations at United Bank for Africa Plc, Abiola Rasaq, said it was the right decision to make by the CBN given its overarching objective which is to promote a sound financial system in the country, with one of the core functions being supervision of banks.
Mr Rasaq, who was PBA’s guest speaker on the topic “Science and Politics of Moving 15,000 CBN Staff to Lagos,’’ explained that the bulk of commercial banks’ transactions in Nigeria occur in Lagos and most of the banks have their head offices in Lagos.
“There is a reason banks do not move their head offices to Abuja including banks that have been in existence even the creation of the federal capital territory including banks that got their licences even as recent as a year ago, there is a reason why they all put their head offices in Lagos. When you look at average banks, one-third of average bank’s deposits come from Lagos. Another one-third of an average bank loan book comes from Lagos… this is where the bulk of the banking sector activities or the overall financial market activities in the country resides.”
The economic analyst maintained that for the central bank to have a more robust oversight on financial institutions and the market as a whole, they need to be close to the commercial banks to monitor their transactions, just as the banks have their head offices in Lagos close to their big customers. This according to him, needs having CBN staff in charge of supervision close to the banks.
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He elucidated that to ensure optimal regulation, central banks in some countries have supervision desks even inside commercial banks just monitor certain transactions and ensure compliance.
Logistics Cost Implications
Mr Rasaq said that the current case in Nigeria is a situation whereby the CBN is situated in Abuja but frequently travels all the way to Lagos for supervision at a significant cost. “Not just in terms of the cost of money but in terms of time that it takes and that slows down supervisory activities of the central bank,” he pointed out.
He added that it also affects the level of supervisory activities of the central bank.
Citing another reason the relocation is necessary, the economic expert, from the perspective of infrastructure, pointed out that due to the increase in human resources of the CBN in the last 10 years, the Abuja office is getting to a stage when it may no longer accommodate the staff over the next couple of years as there is a huge structure already in place in Lagos that is not being used which can comfortably accommodate the staff. Aside from that, he highlighted the risk associated with frequent travel of CBN staff from Abuja to Lagos for banking supervision.
Political undertone
Mr Rasaq dismissed insulations that the decision to move some departments of CBN and Federal Airports Authority of Nigeria (FAAN) to Lagos has a political undertone in terms of being a signal of future intention to move the capital of Nigeria from Abuja to Lagos.
“I think it is absolutely an unfounded and undue speculation,” he said, emphasising that “the federal capital territory is the administrative head of Nigeria, and it would remain so. I think it is important for people to move away from that thinking that moving some departments of CBN to Lagos is a plan to move the FCT to Lagos. It is actually unfounded.”
He added that some of those sponsoring the political narrative around moving some CBN offices to Lagos are those who want to remain in Abuja the seat of power and also continue to work in the apex bank.
“I think it is always important to separate politics, personal interest and biases that people might have from what the objectives are,” which is to ensure efficiency in the financial services sector in Nigeria.
According to him, the decision is based on professional consideration and not political.
He said that because the President and the CBN governor are from Lagos should not be a reason for people to insinuate that the relocation is being done with a political motive, but it should be looked at from an objective perspective to really see the valid reason for it in terms of what is good for the national interest.
Given the reactions being generated by the decision, Mr Rasaq urged the CBN to step up communications about the merits of the plan so that people can be adequately enlightened.
He also called on the National Assembly to be strategic in its oversight of the CBN to avoid impeding the operations of the apex bank, especially on sensitive matters.
Victor Ezeja is a passionate journalist with six years of experience writing on economy, politics and energy. He holds a Masters degree in Mass Communication.
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