DOES the Central Bank have the authority to take the action it has now taken? I thought the answer to that question should be obvious to all. But for the avoidance of any doubt the Central Bank’s functions could be seen from the perspective of three broad thrusts; the traditional functions, the regulatory functions and the developmental. Under the regulatory functions of the Central Bank it is expected to formulate policies to control the amount of money in circulation, control other banks and major players in the financial market and generally promote the soundness and stability of the financial system and it is this aspect of the functions of the Central Bank that empowers it to take the action it has just taken. And it is not as if this is the first time this sort of policy would be reeled out. The code of Corporate governance which the Central Bank released post consolidation which is mandatory for all operators to observe stated that to ensure both continuity and the injection of new ideas, non executive directors should not remain on the board of a bank continuously for more than three terms of four years each, that is, a maximum of twelve years. Even in the civil service tenure has also been recently introduced in an attempt to solve the problem of stagnation resulting in de-motivation and therefore loss in productivity which became the order of the day in the service and there was as should be expected an attempt made to checkmate the introduction of this policy by beneficiaries of the status quo. Therefore it would appear that the introduction of tenure is an idea whose time has come.
The new code of corporate governance is particularly targeted at ensuring that there is balance of power and authority so that no individual or coalition of individuals would have unfettered power of decision making. This explains why shareholding by any investor is pegged at ten percent while holding above this limit would require the explicit approval of the Central Bank and no two members of an extended family should occupy the positions of Chairman and that of CEO or Executive Director of a bank at the same time. All manner of responsibilities have been ascribed to the shareholders who are represented by the board of directors and probably the question to ask is to what extent are boards in Nigeria effective in the discharge of their oversight functions and the monitoring of the performance of the executive management. Where is the board of a company in Nigeria that is constituted by individuals mainly from outside the company who do not have any other relationship with it? Is it not the experience that most of the members of the board are there in proxy capacity and remain compliant and docile to the wishes of the Chief Executive who probably nominated them to the board in the first place? Which ones can truly evaluate and reward the CEO and if necessary remove him or ensure the CEOs remuneration is aligned to his productivity? Which ones would subject the performance of the board of which they are members to critical performance evaluation? This explains why one of the thrusts of the code of corporate governance for bank is to ensure that boards are effective with the capacity for full and effective oversight monitoring of banks and their executive management.
Why make the tenure retroactive? If one of the problems associated with the banks in the country is allegedly due to the fact of the personalization of the banks because of dominant promoter/ CEO thereby resulting in failure to robustly build the institution and if as has been reported some of the CEOs have been on the saddle for nineteen years; how rational is it to expect that such a policy will not be retroactive? I believe that those concerned should quietly withdraw, monitor the considerable investments they have in these banks and pray that they would be allowed to go in peace and not be hounded thereafter. And if they are that inclined they can start another bank or go into other areas of investments. When we recall the fate of the Executive managements that were  earlier sacked and as was reported some of those affected by this policy narrowly escaped the sack by the skin of their teeth and we recall what hassles the sacked CEOs have gone through then there is much to be thankful to the good  Lord for.