CBN Faces Allegations of Misappropriating N2.73tn in Interest Payments
The Nigerian Federal Government has accused the Central Bank of Nigeria (CBN) of misappropriating N2.73tn in interest payments from the controversial Ways and Means facility, sparking fresh concerns over the management of public funds and fiscal accountability.
The allegations, detailed in the Auditor-General’s consolidated financial statement for the year ending December 31, 2021, were submitted to the National Assembly in July 2024. The document, signed by Auditor-General Shaakaar Chira, alleges that the CBN retained interest payments for its “sole benefit” rather than remitting them to the Consolidated Revenue Fund (CRF) as required by law.
At the heart of the controversy is the Ways and Means facility, a temporary loan mechanism allowing the CBN to provide short-term financing for government budget deficits. The report states that interest charges totalling N2.73tn were withheld by the CBN, exacerbating the CRF’s negative balance, which stood at N17.1tn at the close of 2021.
Constitutional Breaches and Regulatory Violations
The Nigerian Constitution and the Financial Regulations of 2009 strictly prohibit unauthorised withdrawals from the CRF. Section 80(2) of the Constitution mandates that all expenditures from the fund must be approved by an appropriation or supplementary act. Additionally, paragraph 710 of the Financial Regulations bars overdrafts and requires that any incurred interest be refunded to the CRF.
Despite these legal safeguards, the Auditor-General’s report identified substantial overdrawn accounts across the CRF and several ministries, totalling N17.1tn. This included N4.4tn in Ways and Means advances, N9.41tn for domestic debt servicing, and N483.97bn for Paris Club loan refunds, among other items.
The report criticises the CBN for treating the facility as though it were financed from its own balance sheet or external syndicated loans, a characterisation the government disputes. “The interest charged on Ways and Means by CBN was misappropriated by CBN for its sole use,” the report reads, calling for the immediate refund of the retained interest to the CRF.
Government Response and Auditor-General’s Recommendations
In its response, the Federal Government accused the CBN of mismanaging the facility and misappropriating public funds. It instructed that the N2.73tn in interest charges should not be securitised alongside other overdraft components currently managed by the Debt Management Office.
The Auditor-General recommended that the Accountant-General of the Federation justify the overdrafts to the National Assembly’s Public Accounts Committees. The report urged the enforcement of sanctions outlined in paragraph 3106 of the Financial Regulations for unauthorised payments.
Describing the issue as a significant risk to Nigeria’s public finances, the audit attributed the irregularities to weaknesses in internal controls at the Office of the Accountant-General. It warned that the unauthorised financing of expenditures and excessive interest payments imposed unnecessary fiscal burdens on the government.
Implications for Fiscal Management
The revelation comes at a critical time for Nigeria’s economy, with rising debt levels and concerns over the transparency of financial management. Experts warn that the alleged irregularities could undermine public confidence in the government’s fiscal discipline and intensify calls for reform in the oversight of public funds.
As the National Assembly prepares to scrutinise the report, the spotlight is now firmly on the CBN and its role in the alleged mismanagement of the Ways and Means facility. Whether the apex bank can satisfactorily account for the N2.73tn in retained interest will likely shape public discourse on Nigeria’s financial governance for months to come.
