The Central Bank of Nigeria (CBN) has significantly reduced its loan exposure to the Federal Government by over ₦4 trillion in 2024, marking a major shift in its monetary policy stance. This development reflects the apex bank’s commitment to restoring fiscal discipline and reducing its direct financing of government deficits.
According to the CBN’s audited financial statements for 2024, net loans and receivables dropped from ₦16.12 trillion in 2023 to ₦11.97 trillion at the bank level. At the group level, the figure fell from ₦15.09 trillion to ₦10.96 trillion, representing a reduction of over ₦4.13 trillion.
The most significant change came from the sharp decline in overdrafts extended to the Federal Government under the Ways and Means provision. This facility allows the central bank to provide short-term advances to the government to cover immediate cash shortfalls, but it is subject to legal limits under Section 38 of the CBN Act (2007). In 2024, the balance on this facility dropped from ₦7.95 trillion to ₦3.27 trillion, a ₦4.68 trillion or 59% reduction.
This move follows widespread criticism of the previous administration’s excessive use of the facility, which often breached statutory limits and contributed to inflationary pressure. To address this, the National Assembly in 2023 approved the securitisation of ₦22.7 trillion in outstanding Ways and Means advances, converting them into long-term bonds. The Federal Government has since repaid ₦7.3 trillion, signalling a shift toward more sustainable debt management.
Alongside reduced lending to the government, the CBN also made substantial recoveries from its intervention programmes, many of which have come under public scrutiny for low repayment rates and weak oversight. The Anchor Borrowers’ Programme, designed to support smallholder farmers, recorded a recovery of ₦112.9 billion in 2024. The outstanding balance fell from ₦424.8 billion to ₦311.9 billion at the group level.
Other major recoveries included ₦43.3 billion from the Commercial Agricultural Credit Scheme, ₦37.5 billion from the Real Sector Support Facility, ₦9.9 billion from Bank of Industry Debentures, and ₦5.85 billion from the Non-Oil Export Facility. The Accelerated Agricultural Development Scheme also saw a reduction of ₦3.37 billion.
These recoveries are part of broader reform efforts by the CBN to improve transparency and efficiency in its development finance operations. Many of the interventions, particularly the Anchor Borrowers’ Programme, have been flagged by the National Assembly, which directed the bank to recover over ₦1 trillion in disbursed but unpaid loans.
Meanwhile, the bank’s financial statements reveal a broader shift in the structure of its loan book. Gross loans declined from ₦17.42 trillion to ₦13.77 trillion at the bank level, a ₦3.65 trillion reduction. Provision for Expected Credit Losses increased from ₦1.3 trillion to ₦1.8 trillion, indicating stricter credit risk assessment and improved loan provisioning.
While many intervention programmes contracted, the CBN’s Standing Lending Facility (SLF), which provides emergency liquidity to banks, surged from ₦29.4 billion in 2023 to ₦386.9 billion in 2024. This suggests a more active and responsive interbank lending environment.
Other notable changes include the full clearance of ₦23 billion in Promissory Notes and the complete elimination of the ₦802.9 billion NESI Stabilisation Debenture, which was initially set up to resolve liquidity issues in the electricity sector. These reductions helped lower the bank’s total liabilities and reflect a strategic cleanup of its balance sheet.
The CBN also reported a modest increase in long-term loans, which rose by ₦712 billion from ₦2.01 trillion in 2023 to ₦2.72 trillion in 2024. This growth suggests that while short-term and politically sensitive lending is being phased out, the bank continues to support long-term, commercially viable programmes.
Governor Yemi Cardoso has repeatedly emphasised the need for the CBN to focus on its core mandate of price stability. These 2024 figures suggest his administration is taking concrete steps to reduce the central bank’s role in deficit financing and restore investor confidence in monetary policy.
Overall, the sharp reduction in government borrowing from the CBN, combined with improved loan recoveries and more prudent financial reporting, represents a decisive break from past practices. As Nigeria grapples with inflation and fiscal pressure, the CBN’s evolving posture could prove pivotal in realigning economic fundamentals.
