The issue of regulation and controls enforcement in Nigeria institutions is one that bothers genuinely on Nigeria’s reality. One really needs to understand if there are enough regulatory institutions in Nigeria, and how often do they pass new regulations or strive to enforce the laws and policy they create? It is very uncommon to hear that banks are fined for any misconduct whatsoever. it almost feels like it never happens which is definitely not logical as humans are definitely prone to misconduct whether intentional or not.
As you continue this read you would see a list of what regulatory institutions currently exists and briefly what they do. But the real challenge is do they do enough and why does it look like fines and sanctions on financial institutions is mythical and almost non existent.
A regulatory institution is a government owned body that is created by a law or legislature to implement and enforce specific laws. Financial regulatory bodies typically, would be responsible for creating, implementing and enforcing laws to protect financial institutions.
The federal and state government have loads of agencies of different sizes and control levels with which they regulate and oversee the activities of the financial markets and companies. Each agency has its specific range of duties and responsibilities that allow them act autonomously whilst driving towards similar objectives.
In Nigeria, the most popular regulatory institution is the Central Bank of Nigeria (CBN). The mandate of CBN is derived from the 1958 Act of Parliament, which was last amended in 2007. The CBN Act of 2007 charges the bank with the overall control and administration of the monetary and financial sector policies of the Federal Government.
The Central Bank also supervises and regulates the banking system to provide overall stability to the financial system. It is responsible for influencing money, liquidity and overall credit conditions. Some major objectives of the CBN includes, the issue of Nigeria’s legal tender currency, ensuring monetary and price stability, act as a banker and provider of economic and financial advise to the Federal Government and overall promote a sound financial system in Nigeria.
Securities and Exchange Commission – SEC Nigeria
The SEC was established in 1962, under the aegis of the Central Bank of Nigeria, with a mandate to examine applications from companies seeking to raise capital from the capital market and recommend best timing to prevent issues with clustering that could overstretch the market’s capacity.
The mission of the SEC is to develop and regulate a capital market that is dynamic, fair, transparent and efficient to contribute to the Nation’s economic development. In regulating the market, the commission engages in certain activities in order to protect investors, market operators’ and also to protect the integrity of the market. These activities include registration, Inspection, Surveillance, Investigation, Enforcement and Rule making.
The Investments and Securities Act 29 of 2007 currently govern the commission’s activities. A Nine-member Board leads the Commission.
The Board determines the policy of the Commission whilst the Director General in turn oversees the day-to-day administration of the Commission. The Commission has its Headquarters at the Federal Capital Territory, Abuja and operates through its Three (3) Zonal Offices located in Lagos, Kano and Port Harcourt.
For more information visit the SEC Website
Economic and Financial Crimes Commission EFCC
EFCC is a Nigerian Law enforcement agency established in 2003, partially in response to FATF requirements to countries with regards to their commitment to eradicating money laundering. This body investigates financial crimes such as advance fee fraud and money laundering. The mission of the commission is to rid Nigeria of economic and financial crimes and to effectively coordinate the domestic effort of the global fight against money laundering and terrorist financing. The legal instrument backing the Commission is the attached EFCC (Establishment) Act 2002 and the Commission has high-Level support from the Presidency, the Legislature and key security and law enforcement agencies in Nigeria.
The Act mandates the EFCC to combat financial and economic
crimes. The Commission is empowered to prevent, investigate, prosecute and penalize
economic and financial crimes and is charged with the responsibility of
enforcing the provisions of other laws and regulations relating to economic and
financial crimes, including:
- Economic and Financial Crimes commission Establishment act (2004)
- The Money Laundering Act 1995
- The Money Laundering (Prohibition) act 2004
- The Advance Fee Fraud and Other Fraud Related Offences Act 1995
- The Failed Banks (Recovery of Debts) and Financial Malpractices in Banks Act 1994
- The Banks and other Financial Institutions Act 1991; and
- Miscellaneous Offences Act.
Independent Corrupt Practices And Other Related Offences Commission – ICPC
The Independent Corrupt Practices and Other Related Offences Commission was inaugurated on the 29th of September, 2000 by President Olusegun Obasanjo. As provided for in Section 3(3) of the Act 2000, the Commission consists of a Chairman and twelve (12) Members, two of who represent each of the six geo-political zones of the country.
The mandate of ICPC is to prohibit and prescribe punishment for corrupt practices and other related offences.
“Section 6 (a-f) of the ICPC Act 2000” sets out the duties of the Commission as paraphrased in the following:
- To receive and investigate complaints from members of the public on allegations of corrupt practices and in appropriate cases, prosecute the offenders.
- To examine the practices, systems and procedures of public bodies and where such systems aid corruption, to direct and supervise their review.
- To instruct, advise and assist any officer, agency, or parastatal on ways by which fraud or corruption may be eliminated or minimized by them.
- To advise heads of public bodies of any changes in practice, systems or procedures compatible with the effective discharge of the duties of public bodies to reduce the likelihood or incidence of bribery, corruption and related offences.
- To educate the public on and against bribery, corruption and related offences.
- To enlist and foster public support in combating corruption.
NIGERIA DEPOSIT INSURANCE COMMISSION – NDIC
Nigeria Deposit Insurance Corporation is an independent agency of the Federal Government of Nigeria. The objective of the deposit insurance system is to protect depositors and guarantee payment of insured funds in the event of failure of insured institutions.
The mandate of the institution includes deposit guarantee, banking supervision, failure resolution and bank liquidation.
“Section 2 of the Nigeria Deposit Insurance Corporation Act 2006” stipulates the functions for the Corporation as follows:
Insuring all deposit liabilities of licensed banks and such other financial institutions (hereinafter referred to as “insured institutions”) operating in Nigeria within the meaning of “Sections 16 and 20 of this Act” so as to engender confidence in the Nigerian banking system;- Giving assistance to insured institutions in the interest of depositors, in case of imminent or actual financial difficulties of banks particularly where suspension of payments is threatened, and avoiding damage to public confidence in the banking system;
- Guaranteeing payments to depositors, in case of imminent or actual suspension of payments by insured institutions up to the maximum as provided for in “section 20 of this Act”;
- Assisting monetary authorities in the formulation and implementation of policies so as to ensure sound banking practice and fair competition among insured institutions in the country; and
- Pursuing any other measures necessary to achieve the functions of the Corporation provided such measures and actions are not repugnant to the objects of the Corporation.
All of these government institutions seek to regulate and protect every participant in the industries they govern. Often times their areas of governorship and supervision may overlap, however their policies may vary and federal agencies would usually have upper hand over state agencies.
Most of these agencies are federally governed allowing for no ‘cell’ control or monitoring at the state level. This is unlike what is obtainable in most developed countries. This lack of management and supervision at the state level limits the level of efficiency that is availed to the supervised institutions.
We would like your contribution and opinions on how these institutions operate to the best of your knowledge, your suggestions and recommendations on how you would love to see some evolution and advancement in the way they operate.
