THE FUNCTIONS AND ROLES OF CENTRAL BANK OF NIGERIA IN ECONOMIC DEVELOPMENT
1.1 BACKGROUND OF THE STUDY
The central bank of Nigeria (C.B.N) was established in the year 1958 by the Central Bank of Nigeria ordinance of 17th march, 1959.
The 1958 central bank ordinance of Nigeria established the (C.B.N) with authorized capital of 1.5 million (3 million) which was fully paid up by the federal government of Nigeria, the bank is 100 percent a public company and there was no provision in the ordinance for the increase in the authorized capital.
On July 1st, 1959, the bank fully commenced business as the bank succeeded the west African currency Board (WACB) which was established in the year 1912, with the responsibilities of issuing legal tender currency and acting as the apex financial institution for then British colonial west Africa. Since the establishment, and following the sub sequential legislation, the (C.B.N) has grown considerably and it’s functions have expanded, for instance in 1975, it’s supreme executive organs, the board of directors consisted of governors a deputy and five other directors, but by 1991, the bank had a governors and four other deputy governors including many directors. As at 1993, the bank had a governor and five deputy governors, twenty board directors and a deputy director. As at December 31st, 1990, the bank had an assets and liabilities totally #133.00 billion.
Moreover, until 1988, the central bank of Nigeria (C.B.N) was under the control of ministry of finance exclusively. But was granted semi-autonomous status in 1988, when it was transferred to the presidency.
Finally, two banking act namely the central bank of Nigeria decree 24, institutions decree 25,1991 have strengthened the autonomy and powers of the central bank of Nigeria. These decrees repeated and repeated the banking act of 1969 and it’s various amendments.
In the first place, section (1) of decree 24 makes the governor of the bank directly responsible to the president of federal republic of Nigeria and no longer minister of finance. Section 39 (1) stated that the (C.B.N) shall be solely responsible for the articulation and implementation of monetary policy and gives it’s powers to regulate the banking system without reference to the ministry of finance. These clauses are designed both streamline monetary policy formation, execution and to enhance the capacity of all non-banking financial institutions.
Conclusively, we can say that the (C.B.N) has been active in development functions by establishing financial institutions, supervising the activities of those institutions and making ways and means available to them to ensure that they achieve their ultimate goals in the economy.
1.2 STATEMENT OF THE PROBLEMS OF THE STUDY
A case study of the various efforts and attempts made by both the various managements of the central bank of Nigeria and administrations in the economy from the year of it’s establishment to the present management and administrations aimed at establishing effective and efficient standards roles and functions of the (C.B.N) managements in terms of economic development (that is ensuring that C.B.N plays a vital role in developing the economy of the nation) has generated crises, mistrust, mutual suspicious and loss of confidence among Nigerians in the (C.B.N) managements.
Culminating from the events and problems chronicled so far, this research will seek to answer such teething problems as how could the central bank of Nigeria (C.B.N) with it’s objectives operational functions, traditional functions achieve also development functions.
How the development functions of central bank really promote economic growth or economic degradation the economy?
Could the central bank alone develop our economy through? And how long will it take the (C.B.N) to develop the Nigerian economy to culminate level. With the advice behaviors of Nigeria those days, do we hope that our economy would be developed so desire like other developed economy?
1.3 OBJECTIVE OF THE STUDY
The main purpose of this research work on the functions and the roles of central bank Nigeria in economic development.
To examine the roles of the Central Bank of Nigeria in economic development as well as to discuss those powers of the (C.B.N) have enable them to achieve the economic development as one of it’s functions and to integrate the Nigerian economy.
1.4 RESEARCH QUESTIONNAIRE / HYPOTHESIS
This research will hinge it’s hypothesis on the following:
Central bank having the functions and the roles of nations economic development doesn’t make for efficiency. Recapitalisation and reconstruction of those development financial institutions doesn’t make for effective management as regards economic development of Nigeria’s economy. The merging of those development financial institutions through with certainty have more capital base, but doesn’t make for proper management.
1.5 SIGNIFICANT OF THE STUDY
This research work is going to be of great significance to the financial institutions, financial students and every Nigerian in general.
The result of this work will help the financial institutions top/ high management in their decision making and implementation process as well. The most important factor note here is that, development what every body is/have been praying for as far as our economy is concern.
Meanwhile, since development is every Nigerian’s expectation, this research work will help to educate the researchers of this work on what development especially economic development entails. Through this work also, we will equally see that the C.B.N is struggling indefatigably to see that the Nigerian economy experience an indommable economic to a culminate level.
Imperatively, we should be away that, this work aimed at educating students especially banking and finance with potentials and finance management to face challenges in any banking sector if employed.
This work is also of essential if not purposely meant for researchers for it will enrich their understanding on what economic development. Finally, this research work will moreover, be a thing of important that would certainly help us/general reading in the public to determine whether the work of development should be for central bank exclusively or a thing that every good Nigerian patriot should be a participant and work seriously to use its success.
1.6 SCOPE AND LIMITATION OF THE STUDY
There are several problems which militates against the (C.B.N) improved performance in its effort to accelerate the country economic development
The factor which make the (C.B.N) monetary policy ineffective include the problems of policy implementations and coordination dearth of data, policy inconsistency and lack of continuity, inimical regulatory frame work, under developed nature of the financial system and inadequate cooperation from the public. Others are the problems of limited independence of (C.B.N) and external imposed policies, as well as the measures adopted in the management of external business, including foreign exchange policies which has not been able fantail malpractices such as development of the purpose of transferring foreign exchange abroad. Generally, resolution of these problems will tremendously enhance impact of the central bank in development process.
1.7 DEFINITIONS OF THE OPERATIONAL TERMS
It is in a work such as research to give specific meaning perception and conception of various terms and phrases is used in the submission and analysis.
This is usually done to limit the researchers to specific interpretation and judgment of the researchers opinion and observations, thereby reduces areas of vague assessment.
The following terms and phrases are their operationalised.
1.7.1 Authorized capital: The largest amount of money a company is allowed to get by selling shares.
1.7.2 Bank: A business that keeps and lends money and provides financial services.
1.7.3 Bankers: Some one who works in a bank in important position.
1.7.4 Bullion: Bars of gold and silver
1.7.5 Central Bank: A national bank that does business with the government and controls the amount of money available and the system of bank.
1.7.6 Currency: The system or the type of money that a particular country uses.
1.7.7 Decree: To make an official judgment or give an official command.
1.7.8 Development: The gradual growth of something. So that it will becomes bigger or more advanced.
1.7.9 Fiscal: Connected with money, taxes debts etc owned and managed by the government.
1.7.10 Management: The act or skill of directing and organizing or organization.
1.7.11 Monetary: Connected with or relating to money, especially all the money in a particular country.
1.7.12 Policy: A course of action that has been officially agreed on.