CBN Cuts FG Loans By More Than N4 Trillion

The Central Bank of Nigeria (CBN) reported a substantial reduction of N4.145tn in net loans and receivables in 2024, primarily due to a significant cut in its overdraft exposure to the Federal Government and adjustments across other loan categories.

According to the bank’s audited financial statements, net loans and receivables at the bank level fell from N16.122tn in 2023 to N11.977tn in 2024, while at the group level, the figure dropped from N15.091tn to N10.959tn, reflecting a N4.132tn decline. The largest adjustment came from the Federal Government overdraft under the Ways and Means provision, which allows short-term advances to bridge temporary funding gaps, as governed by Section 38 of the CBN Act, 2007. This facility was scaled down from N7.948tn in 2023 to N3.268tn in 2024, a 58.89 per cent reduction, aligning with Governor Yemi Cardoso’s reforms to reduce fiscal dominance and improve financial stability.

In response to previous concerns over excessive use of this provision, the National Assembly approved the securitisation of N22.7tn of these advances in 2023, effectively converting them into long-term debt instruments to reduce inflationary pressure. Reports indicate that N7.3tn of this obligation has already been repaid, reflecting the government’s commitment to fiscal discipline.

While the CBN’s earnings from this facility dropped sharply from N1.6tn in 2023 to N3.1bn in 2024, its Standing Lending Facility (SLF) saw a significant increase, rising from N29.431bn to N386.904bn over the same period, indicating renewed activity in the interbank lending market. Long-term loans also grew by N712.673bn, reaching N2.722tn in 2024, highlighting ongoing CBN support for select financing programmes.

However, intervention programmes, which had been a major component of the CBN’s lending portfolio, saw widespread contraction. Notably, AMCON Notes increased from N3.902tn in 2023 to N4.136tn in 2024, while the “Other Loans” category declined marginally at the group level, from N539.377bn to N530.655bn, though it remained steady at N116.187bn at the bank level.

The CBN also fully cleared N23.028bn in Promissory Notes and reduced the NESI Stabilisation Strategy Limited Debenture from N802.918bn in 2023 to zero in 2024, reflecting its efforts to stabilise the power sector.

Meanwhile, the allowance for Expected Credit Losses rose significantly, from N1.3tn in 2023 to N1.801tn in 2024 at the bank level, indicating stricter credit risk recognition.

The CBN also recovered N252.996bn from beneficiaries of its intervention loan programmes in 2024, following Governor Olayemi Cardoso’s decision to phase out the bank’s controversial development finance initiatives. Key recoveries included the Anchor Borrowers’ Programme, which saw balances fall from N424.825bn in 2023 to N311.903bn in 2024 at the group level, and the Commercial Agricultural Credit Scheme, which dropped from N101.783bn to N58.453bn, a recovery of N43.33bn.

Additionally, the NESI Stabilisation Strategy Limited Loan, a major intervention in the power sector, declined by N8.461bn to N368.371bn in 2024, reflecting the CBN’s ongoing efforts to reduce its exposure to high-risk assets.