The Central Bank of Nigeria (CBN) has significantly scaled back its lending to the Federal Government, slashing net loans and receivables by more than ₦4 trillion in 2024, according to its recently released audited financial statements.
At the core of this reduction is a sharp decline in the CBN’s overdraft facility to the Federal Government, also known as the Ways and Means Advances—a short-term funding mechanism used to bridge budget deficits. This facility dropped from ₦7.95 trillion in 2023 to ₦3.27 trillion in 2024, representing a 58.89% decrease.
This move aligns with ongoing efforts by CBN Governor Yemi Cardoso to rein in fiscal dominance and restore monetary stability. The reduction also reflects the government’s repayment of a portion of these advances, with ₦7.3 trillion reportedly reimbursed so far.
Declining Loan Portfolio Reflects Policy Shift
At the bank level, net loans and receivables fell from ₦16.12 trillion in 2023 to ₦11.98 trillion in 2024, while group-level figures dropped from ₦15.09 trillion to ₦10.96 trillion. The change highlights a broader retreat from short-term lending practices that had previously drawn criticism for undermining monetary policy discipline.
The reduction was partly influenced by the 2023 decision by the National Assembly to securitize ₦22.7 trillion worth of overdrafts, converting them into long-term bonds to reduce inflationary pressures.
Shifts in Lending and Liquidity Tools
The apex bank’s earnings from government overdrafts also fell sharply—from ₦1.6 trillion in 2023 to just ₦3.1 billion in 2024. Meanwhile, its Standing Lending Facility (SLF)—used to provide short-term liquidity support to commercial banks—surged from ₦29.43 billion to ₦386.9 billion, indicating a rebound in interbank lending activity.
Long-term loans expanded by ₦712.7 billion, rising from ₦2.01 trillion to ₦2.72 trillion, signaling CBN’s continued involvement in select developmental finance initiatives.
Other Loan Adjustments and Write-offs
Some elements of the loan portfolio remained steady or increased slightly. AMCON Notes, instruments aimed at stabilizing the financial system, rose by ₦234.1 billion to reach ₦4.14 trillion. In contrast, miscellaneous loans not tied to specific interventions dipped slightly at the group level.
Additionally, the Promissory Notes valued at ₦23 billion and the ₦802.9 billion NESI Debenture, used to support the power sector, were fully retired in 2024, contributing to the reduction in gross loans.
Tighter Credit Controls
The CBN also strengthened its credit risk framework, with provisions for Expected Credit Losses increasing to ₦1.8 trillion in 2024, up from ₦1.3 trillion the previous year. This signals a more cautious approach to lending and greater emphasis on financial discipline.
Summary of Key Financial Shifts
- Net loans and receivables dropped by over ₦4 trillion across both bank and group levels.
- Ways and Means Advances reduced by 59%.
- SLF usage increased more than tenfold.
- Promissory Notes and NESI Debenture were fully paid off.
- Expected Credit Losses provisions rose significantly.
These changes mark a notable shift in the CBN’s operational stance, moving away from deficit financing and toward improved financial stability and transparency. Analysts view these developments as a step in the right direction toward rebuilding market confidence and curbing inflation.
