CBN Slashes FG Loans By Over N4tn
The Central Bank of Nigeria recorded a significant decline of N4.145tn in net loans and receivables in 2024, driven primarily by a reduction in its overdraft exposure to the Federal Government and changes across other loan categories. According to the apex bank’s audited financial statements, net loans and receivables at the bank level dropped from N16.122tn in 2023 to N11.977tn in 2024. At the group level, the figure declined from N15.091tn to N10.959tn, reflecting a N4.132tn drop.
The Ways and Means provision in Nigeria refers to the CBN’s practice of extending temporary advances to the Federal Government to cover short-term funding gaps. Governed by Section 38 of the CBN Act, 2007, this facility allows the government to borrow up to 5 per cent of its previous year’s actual revenue. However, this limit was exceeded under the previous administration, leading to concerns about fiscal discipline and monetary policy implications. This move effectively converted the short-term overdrafts into long-term debt instruments, aiming to mitigate inflationary pressures and restore monetary stability.
Also, the Federal Government repaid a part of this obligation, with reports indicating that N7.3tn has been paid back so far. This repayment aligns with the government’s commitment to reducing reliance on central bank financing and enhancing fiscal responsibility. This facility, which stood at N7.948tn in 2023, was scaled down to N3.268tn in 2024, a sharp reduction of N4.679tn or 58.89 per cent. The decline aligns with Governor Yemi Cardoso’s reform stance and a shift away from fiscal dominance, following years of criticism over the central bank’s role in deficit.
In contrast to intervention-based programmes that saw widespread contraction, certain legacy and operational exposures remained stable or expanded slightly. Notably, AMCON Notes rose from N3.902tn in 2023 to N4.136tn in 2024, an increase of N234.096bn. These notes remain a key part of the CBN’s financial system stabilisation efforts and are backed by a sinking fund arrangement. The “Other Loans” category, which includes legacy or miscellaneous lending not classified under specific programmes, declined marginally at the group level by N8.722bn, from N539.377bn to N530.655bn.vAt the bank level, however, the line item held steady at N116.187bn. Staff loans grew from N58.521bn to N65.644bn at the group level and from N58.521bn to N65.194bn at the bank level, while Nigerian Treasury Bonds remained unchanged at N423m.
These loan eliminations further contributed to the sharp drop in the bank’s total gross loans and receivables. Gross loans at the group level declined from N16.391tn in 2023 to N12.767tn in 2024, a contraction of N3.624tn. At the bank level, gross loans fell by N3.645tn from N17.422tn to N13.778tn. These figures reflect a broad reduction in exposure across lending categories. At the same time, the allowance for Expected Credit Losses increased from N1.3tn in 2023 to N1.801tn in 2024 at the bank level and from N1.3tn to N1.808tn at the group level, signalling stricter credit risk recognition and improved provisioning discipline.
At the bank level, the figure declined from N408.801bn to N296.830bn. Originally launched in 2015 to support smallholder farmers by linking them with off-takers, the programme has come under criticism from the National Assembly, which recently directed the CBN to recover over N1tn disbursed under the scheme, citing poor recovery levels.
The Commercial Agricultural Credit Scheme also recorded a sharp drop in outstanding balances, declining from N101.783bn in 2023 to N58.453bn in 2024, a recovery of N43.33bn. The Real Sector Support Facility reduced from N98.237bn to N60.730bn within the same period, resulting in a repayment of N37.507bn. Meanwhile, the BOI Debenture balance dropped by N9.941bn to N52.055bn, and the Export Development Facility saw a minor decrease of N802m to N139.621bn.
The Non-Oil Export Facility recorded a recovery of N5.855bn, falling to N8.071bn. The NIRSAL Lending Debenture, however, saw a slight increase, rising from N268.655bn to N269.380bn.
Cardoso, who assumed office in 2023, had announced a strategic departure from the previous administration’s interventionist finance model, arguing that such practices distorted monetary policy transmission and reduced private sector lending. Speaking at a press briefing after the first Monetary Policy Committee meeting of 2024, Cardoso said, “The intervention has two dysfunctions. One it takes a lot of time for something you do not have an expertise to do, and two, if not carefully handled, creates a lot of distortions in your economy through inflow of money supply.”
He added, “The interventions that took place in the recent past were estimated in excess of N10tn. I’m not talking about ways or means. What was the budget of the federal government of Nigeria? What was the budget of the largest states in Nigeria? Do the maths and it would tell you the extent of damage too much of what may appear to be good things can do to an economy.
The 2024 financial statement validates this policy pivot, with significant recoveries suggesting efforts by the apex bank to restore its focus on monetary stability and financial sector discipline.While the CBN has halted new applications under its intervention schemes, repayments and recoveries remain active. The drawdown of these programmes has continued to generate debate, with stakeholders divided on their legacy.
