Ways and means is a provision under Section 38 of the Central Bank of Nigeria Act. The law allows the CBN to grant temporary advances to the Federal Government in respect of temporary deficiency of budget revenue at an interest. It is an advance – money loaned to the Federal Government by the CBN. However, this particular loan must be repaid to the CBN within the fiscal year it is borrowed. It is like an overdraft that you take from the bank and pay back immediately when your account is funded.
What makes ways and means unique is that it has no oversight regulation from the National Assembly. The National Assembly does not regulate it, and that allows the Federal Government to request a loan from the CBN without approval. This has been one of the criticisms against ways and means. The National Assembly and the citizens might not know when the money was received and for what purpose it was obtained. It is always shrouded in secrecy.
Normally, ways and means should be five per cent of the government’s revenue within the preceding year. But over the years, successive governments have been borrowing from the CBN without repaying the money within that fiscal year. Under former President Muhammadu Buhari, the government borrowed trillions of naira from the CBN, and the loan kept accumulating from President Jonathan’s administration till the present government. When the Federal Government couldn’t pay back this money, it came up with a plan to securitise the loan. That was when we went to court to stop the move, but the court ruled against us.
What does securitise mean?
Ways and means is a debt of the Federal Government to be paid to the CBN. There is a difference between the debt of the Federal Government and the debt of Nigeria. Nigeria’s debt is a public debt, whereas the Federal Government’s debt is private, to be paid by it alone. You cannot include Nigeria’s debt when you are highlighting or calculating the Federal Government’s debt.
