By Anastasia John E.
The Central Bank of Nigeria (CBN) earned N3.1 billion in interest on the Federal Government’s overdraft facility in 2024, marking a sharp decline from the N1.6 trillion recorded in 2023, according to the apex bank’s audited financial statements.
This interest income, classified under “loans and receivables” in the CBN’s 2024 financial report, relates to the controversial Ways and Means facility—an overdraft extended by the CBN to the Federal Government to address short-term fiscal deficits.
“Included in interest income on loans and receivables is interest income on overdraft facility granted to the Federal Government, amounting to N3.1 billion (2023: N1.6 trillion),” the CBN disclosed.
The interest rate applied to the overdraft was the Monetary Policy Rate plus three percentage points.
The year-on-year decline of 99.8 percent signals a significant shift in fiscal and monetary policy coordination, as the CBN moves to reduce the government’s reliance on the overdraft facility.
This drastic drop follows the Federal Government’s securitisation of N22.7 trillion in outstanding overdrafts in 2023, converting them into 40-year bonds with a three-year moratorium. This move, approved by the National Assembly, aimed to mitigate the inflationary impact of the advances while strengthening the CBN’s balance sheet.
In June 2024, the Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, announced that the Federal Government had repaid N7.3 trillion of the securitised Ways and Means debt. He also revealed that the government had ceased relying on the CBN overdraft for debt servicing, noting that all expenditures were now executed through a more transparent and accountable framework.
Moreover, CBN Governor Mr. Olayemi Cardoso informed lawmakers that the bank would not grant further overdrafts to the Federal Government until all outstanding balances were fully cleared.
The Ways and Means Advances are loan facilities the CBN uses to finance the government during periods of temporary budget shortfalls, subject to legal limits. According to Section 38 of the CBN Act, 2007, the apex bank may grant temporary advances to the Federal Government for temporary revenue deficiencies at an interest rate determined by the bank.
Controversy surrounded the facility in 2023 when former CBN Governor Godwin Emefiele allegedly approved N22.7 trillion in Ways and Means funding for former President Muhammadu Buhari without National Assembly approval.
Critics have long argued that the Ways and Means facility undermines monetary policy and fuels inflation, warning that excessive government reliance on the overdraft blurs the separation between fiscal and monetary responsibilities.
In 2021, the Office of the Auditor-General of the Federation raised concerns about N2.73 trillion in allegedly misappropriated interest payments by the CBN, accusing the bank of treating the facility as a loan for its own benefit without proper documentation or transparency.
