Expert urges CBN to access $20bn BIS potential shareholding fund

Expert urges CBN to access $20bn BIS potential shareholding fund Abdulrazaq Hamzat, Executive Director of the Foundation for Peace Professionals, has called on the Central Bank of Nigeria to consider Nigeria's participation in the Bank for International Settlements (BIS). Hamzat argues that such involvement could unlock up to $20 billion in economic value over a ten-year period through better management of the nation’s financial resources. The proposal was outlined in a statement released by the Foundation for Peace Professionals, which highlighted the strategic importance of engaging with the BIS. According to the statement, the BIS is composed of 63 central banks and monetary authorities representing economies that together make up approximately 95 percent of the world's gross domestic product. These member institutions hold voting and representation rights during BIS general meetings. Hamzat emphasized that the $20 billion figure refers not to direct financial gain but to the potential economic value generated through enhanced management practices. He explained that the focus should be on how Nigeria could improve the handling of its reserves, foreign exchange, monetary policy, and financial stability through deeper integration with the BIS network. He pointed out that the BIS plays a crucial role in setting global financial standards, including those established by the Basel Committee on Banking Supervision. By participating in these frameworks, Nigeria could enhance its ability to prevent financial crises, which often have widespread negative impacts on businesses, households, government revenues, employment, investment, and overall economic growth. The expert also noted that improved financial stability monitoring, risk management, and crisis preparedness could yield significant economic benefits without necessarily increasing government revenue. This perspective underscores the long-term advantages of institutional strengthening over immediate financial gains. Hamzat further highlighted the importance of effective foreign exchange management, particularly given Nigeria's vulnerability to fluctuations in global interest rates, commodity prices, and capital flows. He argued that a more informed and proactive approach to managing the Nigerian naira could help mitigate the effects of these external factors. Additionally, he stressed that the primary objectives of reserve management should remain focused on safety, liquidity, and return, rather than pursuing excessively risky strategies aimed at maximizing returns. Even minor improvements in risk-adjusted returns, liquidity management, and asset allocation could result in substantial savings and additional value when applied to Nigeria’s vast external reserves. The Foundation for Peace Professionals' call for increased engagement with the BIS reflects broader efforts to bolster Nigeria's financial institutions. Hamzat believes that deeper involvement with the BIS could contribute to building a more resilient financial sector capable of withstanding global economic shocks. As the discussion around Nigeria's potential membership in the BIS continues, experts and policymakers will likely examine the implications of such a move. The debate centers on whether the benefits of institutional alignment outweigh the costs and risks associated with joining the exclusive group of central banks that currently form the BIS.