At an emergency plenary session on Saturday, the Nigerian Senate amended the Central Bank of Nigeria (CBN) Act, to increase the total CBN Advances (Ways and Means provision) to the Federal Government from 5% to a maximum of 15% of previous year’s revenue.
The plenary which was reported to have started around 11am on Saturday is a departure from the usual practice which has the sitting days for the Senate plenary on Tuesdays and Wednesdays, and the approval comes just two days before the end of Buhari’s administration.
The bill was presented by the Senate Leader, Abdullahi Gobir (Sokoto East) and was tagged “The Central Bank of Nigeria Act (Amendment) Bill, 2023 (SB. 1125).
Leading the debate on Saturday, Senator Gobir said, “Mr President, my respected colleagues, permit me to lead the debate on this Bill which seeks to amend the Central Bank of Nigeria (CBN) Act to increase the total CBN advances to the Federal Government from five per cent to a maximum of 15 per cent (15%).
“The Bill was read for the first time in this Chamber on Wednesday, May 24, 2023.
“This amendment is very consequential, and it needs the support of us all. This is to enable the Federal Government to embark on very important projects that will inflate and rejig the economy.
“I, therefore, urge you all to support the passage of this bill.”
In a report earlier on Saturday, Nairametrics stated that the National Assembly was in a session deliberating on how to increase the Ways and Means provision from 5% to 15%.
The report stated that this was contained in a draft bill seen by Nairametrics seeking to “amend section 38 of the CBN Act by substituting the words five percent with the words fifteen percent.”
Section 38 of the Central Bank of Nigeria Act, 2007, deals with advances to the Federal Government, and before the amendment today, it stated;
38(1) – Notwithstanding the proviions of section 34 (d) of this Act, the Bank may grant temporary advances to the Federal Government in respect of temporary deficiency of budget revenue at such rate of interest as the Bank may determine.
38(2) – The amount of such advances outstanding shall not any any time exceed five percent of the previous year’s actual revenue of the Federal Government.
38(3) – All Advances made pursuant to this section shall be repaid;
a). as soon as possible and shall in any event be repayable by the end of the Federal Government financial year in which they are granted and if such advances remain unpaid at the end of the year, the power of the Bank to grant such further advances in any subsequent year shall no be exercisable, unless the outstanding advances have been repaid; and
b). in such form as the Bank may determine provided that no repayment shall take the form of a promissory note or such other promise to pay at a future date or securitization by way of issuance of treasury bills, bonds, certificates or other forms of security which is required to be underwritten by the Bank.
The outgoing administration of Major General Muhammadu Buhari GCFR (Rtd.) has breached the provisions of the CBN Act over the years, and had sort to legalize the breach by converting the loan into a national debt.
The National Assembly recently approved the securitization of Nigeria’s Ways and Means loans currently estimated at about N22.7 trillion, paving the way for the legislation of the controversial debt. The debt, which is for a tenure of 40 years, attracts an interest rate of 9% per annum with repayment of principal starting after 3 years.
The quest to increase it to 15% allows even more borrowing and more debt service obligation for the future generation of the country.
Nairametric reported that the FG has collected an additional N4 trillion in Ways and Means in the last three months taking the total extra-budgetary printing to N26 trillion.
At N4 trillion, the extra drawing of the government is already about 36% of the 2023 FG annual budgeted revenue of N11 trillion. Last year’s revenue target was N8.2 trillion thus almost 50% of the budget in Ways and Means drawings.
President Buhari will on Monday, 29th May, 2023 complete his second tenure and hand over the running of the country to Senator Ahmed Bola Tinubu who was declared the winner of the disputed February 25th, 2023 Presidential elections.
Nnamdi Maduakor is a Writer, Investor and Entrepreneur