The Central Bank of Nigeria (CBN) has significantly slashed its net loans and receivables by over N4 trillion in 2024, marking a strategic pivot from expansive lending—particularly to the Federal Government—towards a more conservative and stability-focused monetary policy stance.
According to the apex bank’s audited financial statements, net loans at the bank level fell from N16.12tn in 2023 to N11.98tn in 2024—a drop of N4.15tn. At the group level, the figure declined by N4.13tn, from N15.09tn to N10.96tn.
The most notable cut came from the Federal Government’s overdraft facility under the Ways and Means provision, which was scaled down from N7.95tn to N3.27tn—a steep 58.9% reduction.
The Ways and Means facility, governed by Section 38 of the CBN Act, allows the government to borrow up to 5% of its previous year’s revenue. However, the limit was grossly exceeded under the previous administration, prompting concerns over fiscal irresponsibility and monetary policy distortions.
To address this, the National Assembly approved the securitisation of N22.7tn in overdrafts in 2023, effectively converting them into long-term debt instruments. So far, the Federal Government has repaid N7.3tn of the amount, aligning with efforts to wean itself off central bank financing.
CBN Governor Olayemi Cardoso, who assumed office in 2023, has consistently advocated for limiting monetary interventions, arguing that past practices contributed to inflation and liquidity distortions. “The time of failed interventions is over,” he declared during the bank’s first Monetary Policy Committee meeting of 2024.
The CBN’s gross loan portfolio also shrank sharply. At the group level, gross loans dropped from N16.39tn to N12.77tn, while at the bank level, it decreased from N17.42tn to N13.78tn—a total contraction of about N3.6tn.
Meanwhile, the allowance for Expected Credit Losses rose by over N500bn, reaching N1.8tn, underscoring the bank’s commitment to tightening risk assessments and provisioning practices.
In line with its phased withdrawal from interventionist financing, the CBN recovered N252.99bn in 2024 from its development finance programmes. These include the Anchor Borrowers’ Programme, Real Sector Support Facility, Commercial Agricultural Credit Scheme, and others.
The Anchor Borrowers’ Programme alone recorded repayments of N112.92bn at the group level, reducing outstanding balances to N311.9bn. This comes amid mounting scrutiny from the National Assembly, which recently ordered the apex bank to recover over N1tn from the scheme.
The Commercial Agricultural Credit Scheme saw a recovery of N43.33bn, while the Real Sector Support Facility and BOI Debentures recorded repayments of N37.5bn and N9.94bn, respectively.
The Export Development Facility and Non-Oil Export Facility posted modest recoveries, while the NIRSAL Lending Debenture rose slightly, remaining one of the largest items on the CBN’s books.
NESI Debenture, Other Loans Cleared
In the power sector, the CBN made substantial progress in clearing liabilities. The NESI Stabilisation Strategy Limited Debenture, valued at N802.92bn in 2023, was fully repaid in 2024. Likewise, promissory notes previously worth N23bn were written off.
The CBN’s exposure through the Standing Lending Facility—used to manage short-term liquidity among banks—rose significantly from N29.4bn to N386.9bn, indicating renewed interbank market activity.
Other notable figures include:
AMCON Notes: Increased to N4.14tn from N3.9tn.
Staff Loans: Rose marginally to N65.6bn.
Long-Term Loans: Up by N712.7bn to N2.72tn.
Nigerian Treasury Bonds: Unchanged at N423m.
A New Monetary Path
Governor Cardoso’s stance signals a clear departure from his predecessors’ intervention-heavy approach. He argues that the CBN must refocus on its core mandate of price and financial system stability, rather than assuming quasi-fiscal roles.
He noted that over N10tn was injected into intervention schemes in previous years, warning that such practices, while well-intentioned, often distort markets and undercut private sector participation.
While the CBN has halted new intervention loans, recoveries from existing schemes continue, sparking debate among analysts and policymakers. Supporters credit the programmes for cushioning sectors during tough times, while critics highlight poor monitoring, weak repayment structures, and fiscal indiscipline.
SOURCE: bizwatchnigeria.ng