The National Assembly has approved a raise in the limit for Central Bank of Nigeria’s Ways and Means advances to the Federal Government from 5% to 10% of the previous year’s revenue. However, this decision faced resistance from the Organised Private Sector and opposition members in the assembly.
Ways and Means advances are funds provided by the CBN to cover government revenue shortfalls during budget execution.
The recent amendment bill, which rescinded and re-enacted the 2024 Appropriation Act, was put forward by leaders from both chambers of the National Assembly.
In the Senate, the bill, spearheaded by Senator Opeyemi Bamidele (APC Ekiti Central), aimed to modify the CBN Act to widen the total CBN advances to the Federal Government to aid in meeting immediate and future financial obligations amid growing fund requirements for budget deficits and other expenses.
During the debate, Senators voiced support for the amendment but proposed reducing the threshold from 15% to 10% of the previous year’s revenue.
The approved increase is in response to the rising demand for funds to address budget shortfalls, fund crucial government outlays, ensure financial market stability, boost the economy, and support key sectors like agriculture, healthcare, and infrastructure.
Following deliberations, a majority of Senators amended the bill to limit borrowing to 10%, rejecting the initially proposed 15% to maintain fiscal discipline.
The Senate also unveiled an Ad-hoc committee to investigate the Federal Government’s utilization of the N30 trillion obtained through Ways and Means advances from 2014 to 2023 without National Assembly authorization.
Moreover, the Senate and the House of Representatives amended the 2024 Appropriation Act during an emergency session without altering the budget size based on recommendations from the National Assembly’s Directorate of Legal Services.
The session ended with an adjournment to September 17, 2024, following the amendments.
In the House of Representatives, despite opposition votes, the bill amending the CBN Act was passed, signifying a split in opinions.
OPS, experts’ reactions
Critics like Dr. Femi Egbesola, National President of the Association of Small Business Owners of Nigeria, expressed concerns over the move’s inflationary impact and increased debt servicing obligation, limiting resources for developmental projects.
Segun Kuti-George, National Vice President of the Nigerian Association of Small-Scale Industrialists, highlighted the historical abuse of Ways and Means borrowing by past administrations, emphasizing the potential inflationary consequences of expanding the borrowing limit.
Dr. Muda Yusuf, Director of the Centre for Promotion of Private Enterprise, deemed the 10% increase in the borrowing limit as reasonable and less extreme compared to past administrations, emphasizing the role of Ways and Means in managing revenue seasonality.
Additional reports by Arinze Nwafor, Oluwakemi Abimbola, and Daniel Adaji