Staff loans grow by 11.8% as CBN slashes FG loans by over N4 trillion

• The Central Bank of Nigeria (CBN) has been on track to tighten fiscal policies and reduce liquidity since 2024
• This included aggressive loan recovery moves that led to an inflow of over N250 billion from several loan programmes
• In contrast, checks reveal that the apex bank has increased loans to staff by over 11% in the same period

Legit.ng journalist Ruth Okwumbu-Imafidon has over a decade of experience in business reporting across digital and mainstream media.

The Central Bank of Nigeria’s recent fiscal and monetary tightening has led to a sharp decline in its net loans and receivables.

Checks show that this figure reduced by N4.145 trillion in 2024, largely driven by a reduction in the Ways and Means advanced to the federal government, and recovery of other loan categories.

The bank recently presented its financial statement for 2024, to show that it had reversed the 2023 losses to post a N38 billion profit.

In the same period, net loans and receivables dropped from N16.122 trillion to N11.977 trillion at the bank level, and from N15.091 trillion to N10.959 trillion at the group level.

Both figures point to a reduction in total loans by about N4.132 trillion. The aggressive loan recovery from several intervention loan programmes has also contributed to the sharp decline in total loans and receivables.

Gross loans have reduced from N16.391 trillion to N12.767 trillion at the group level, and from N17.422 trillion to N13.778 trillion at the bank level, an indication that the CBN is reducing exposure across the different lending categories.

CBN staff loans grow by 11.8%

The CBN financial statement also reveals an increase in staff loans. At the group level, it grew from N58.521 billion to N65.644 billion, and at the bank level, from N58.521 billion to N65.194 billion.

This is difficult to reconcile as the apex bank disengaged over 1000 staff last year and settled them with about N50 billion in severance payments.

Part of the CBN processes includes settling all outstanding loans before paying the severance packages, and some staff even protested being left with little after CBN deducted their loans.

The increase in staff loans by the end of the financial year, thus, raises questions as what policies are being adopted.

CBN slashes FG loans by over 59%

Under the administration of the former President Muhammadu Buhari and the CBN Governor, Godwin Emefiele, the Ways and Means provision was sorely overstretched.

Section 38 of the CBN Act (2007) allows the apex bank to extend temporary advances to the federal government using the ways and means. This section provides that it may only be used to cover short-term funding gaps, and should not exceed 5% of the previous year’s actual revenue.

Unfortunately, this limit was severally breached in the past leading to over trillion of naira debts from such advances and raising concerns about Nigeria’s fiscal health.

The National Assembly eventually approved the securitization of this debt in 2023, allowing the government to convert it from short-term overdrafts to long-term loan facilities.

The CBN’s financial statement shows that this sum has reduced from N7.948 trillion in 2023 to N3.268 trillion in 2024. This marks a 58.89% decline or N4.679 trillion.

Similarly, the CBN’s earning of the federal government’s overdraft declined from N1.6 trillion in 2023 to N3.1 billion in 2024, a confirmation of the sharp reduction in government lending from the CBN.

Nigerian treasury bonds, however, remained the same at N423 million, the PUNCH reports.

Other loan categories have declined from N539.377 billion to N530.655 billion at the group level.

CBN recovers N253 billion loan from Nigerians

In related news, the CBN has embarked on aggressive loan recovery across several loan intervention programmes.

Legit.ng reported that the CBN recovered N253 billion from several programmes in 2024 to reduce outstanding loans, while a few have been completely cleared.

The CBN governor reiterated that the apex bank was phasing out the development financing initiatives and needed to recover over N1 trillion that had been injected into such programmes.

Source: Legit.ng