Wafric News – May 11, 2025

The Central Bank of Nigeria (CBN) recorded a steep decline in earnings from the Federal Government’s overdraft facility in 2024, pulling in just N3.1 billion in interest income—a sharp drop from the staggering N1.6 trillion recorded the previous year.

WafricNews obtained this figure from the apex bank’s newly released audited financial statements, which place the earnings under its “loans and receivables” category. The overdraft facility, known as Ways and Means, has long been a controversial fiscal tool, used by the Federal Government to cover short-term budget shortfalls by borrowing directly from the CBN.

According to the financial report, “Included in interest income on loans and receivables is interest income on overdraft facility granted to the Federal Government, amounting to N3.1bn (2023: N1.6tn).” The rate applied to this borrowing was the Monetary Policy Rate (MPR) plus three percentage points.

The 99.8% year-on-year decline signals a significant pivot in how fiscal and monetary authorities are managing government financing. The fall comes in the wake of the Federal Government's conversion of N22.7 trillion in overdrafts into long-term bonds in 2023—a move aimed at reducing inflationary pressure and reinforcing the CBN’s financial position.

This securitisation, backed by the National Assembly, turned the overdrafts into 40-year bonds with a three-year moratorium. It also paved the way for the government to reduce its dependence on the CBN’s direct lending facility.

In June 2024, the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, revealed that N7.3 trillion of the securitised debt had been repaid. He added that the administration had ceased reliance on Ways and Means for financing, moving instead toward a more transparent and rules-based fiscal framework.

Further reinforcing this shift, CBN Governor Olayemi Cardoso assured lawmakers that the bank would no longer extend overdraft facilities to the Federal Government until all pending balances were fully cleared.

The CBN’s Ways and Means Advances are designed to serve as short-term emergency funding to bridge temporary gaps in federal revenue. However, Section 38 of the CBN Act, 2007 stipulates clear limits and conditions under which such advances can be issued.

Despite this legal framework, the facility has come under fire for being misused. In 2023, public scrutiny intensified following revelations that former CBN Governor Godwin Emefiele had allegedly printed N22.7 trillion without National Assembly approval during President Muhammadu Buhari’s administration.

The practice has sparked widespread concerns over its impact on Nigeria’s economy. Economists, civil society groups, and watchdog institutions have warned that excessive reliance on the facility has undermined monetary policy credibility and contributed to inflationary pressures.

In a 2021 report, the Office of the Auditor-General of the Federation accused the CBN of mismanaging over N2.73 trillion in interest payments, alleging a lack of transparency and improper classification of the overdraft as a regular loan.

As the CBN now tightens its lending practices and the federal government shifts toward more accountable fiscal mechanisms, analysts are watching closely to see whether Nigeria can sustain this new era of monetary discipline.


By WafricNews Desk.