CBN: Curbing Corruption, Inflation by Killing Ways and Means, by Abdulrahman Abdulraheem
Ex-President Muhammadu Buhari is believed to be the one who repeatedly made the popular quotable quote: “If we don’t kill corruption, corruption will kill Nigeria.” One is not however sure if this is a case of ‘follow what I say and not what I do.’ This is because many Nigerians are of the belief that his administration did more of birthing corruption than killing the hydra-headed monster, and Nigeria is still bleeding profusely from the impact of the devastating blow President Buhari’s lieutenants dealt to the country’s economy.
I don’t know whether to laugh or cry at this embarrassing irony. It was under his watch that a whooping 22.7 trillion naira was taken from the Central Bank of Nigeria (CBN) in the name of Ways and Means which in recent years has become an euphemism for merely printing money for reckless spending by government officials without corresponding production, thereby, exacerbating inflation.
The more scandalous irony is the fact that it was General Buhari (rtd), the famed Mai Gaskiya with zero tolerance for corruption, who supervised the gang-rape of the country’s treasury in the name of Ways and Means and other conduit pipes while it is President Bola Ahmed Tinubu, who his critics say, has a lot fondness for corruption, is the one trying to clean the Augean Table, saying Enough is Enough.
A lot has been written about the Godwin Emefiele-led profligacy of the recent past and at the risk of sounding like a broken record, it must be stated that any administration that wants to succeed must not only bring people who abuse their office to book, it must also draw a line and ensure that such cruel rape of the nation’s treasury is not repeated under its watch.
Emefiele’s Filth
Ways and Means is the money that the CBN lends to the Federal Government in the meantime to augment spending based on the time the revenue is generated.
Emefiele and his Villa enablers however made it a habit to abuse this practice. Without approval from the National Assembly as required by law, Emefiele allegedly printed the sum of N22.7tn for the former President under the Ways and Means provision within the eight years he was in power. He kept on violating the country’s financial laws which state that Ways and Means allocation to the Federal Government must not be higher than five per cent of government’s revenue in the previous year. In March 2022, the Debt Management Office (DMO) announced that the Federal Government had borrowed a total of N18.16 trillion from the Central Bank. The debt as of then was more than 40 per cent of the money supply in the economy.
Edo state governor, Godwin Obaseki, had warned Emefiele and the former President that their obsession with printing money for consumption would hurt the economy in a significant manner. It was so bad that after a particular Federation Account Allocation Committee (FAAC) meeting, Obaseki had to raise alarm that 60 billion naira out of the money disbursed to the tiers of government were hurriedly printed by the CBN. He warned that the inflation that will follow the misuse of Ways and Means in the coming months and years would be unbearable. Instead of the government of the day to take his useful advice, they deployed their media machinery, went for his jugular and bullied him into silence.
The empty house President Tinubu has met in the name of an economy is the result of not heeding to the wise counsels of Obaseki and other sound minds.
Cardoso’s Cards
To put a stop to the chaos, CBN Governor, Olayemi Cardoso, has said the apex Bank will no longer grant Ways and Means to the Federal Government unless the outstanding balance is settled.
Cardoso also announced measures the Bank was taking to tame the rising inflation in the country which has led to an astronomical increase in the prices of goods and services.
He made this clear when he appeared recently before the Senate Committee on Banking, Insurance and other Financial Institutions alongside the Minister of Finance and Coordinating Minister for the Economy, Olawale Edun, the Minister of Budget and National Planning, Atiku Bagudu, and the Minister of Agriculture, Abubakar Kyari.
While his position complies with section (38) of the CBN Act (2007), Mr Cardoso said the payment of the outstanding balance of the Ways and Means will control inflation in the country.
“I am pleased to note the Fiscal Authorities efforts in discontinuing Ways and Means advances. This is also in compliance with Section (38) of the CBN Act (2007), the Bank is no longer at liberty to grant further Ways and Means advances to the Federal Government until the outstanding balance as of December 31, 2023, is fully settled. The Bank must strictly adhere to the law limiting advances under Ways and Means to 5 per cent of the previous year’s revenue.
“We have also halted quasi-fiscal measures of over 10 trillion naira by the Central Bank of Nigeria under the guise of development finance interventions which hitherto contributed to flooding excess Naira and raising prices to the levels of inflation we are grappling with today.
“The CBN’s adoption of inflation-targeting framework involves clear communication and collaboration with fiscal authorities to achieve price stability, potentially leading to lowered policy rates, stimulating investment, and creating job opportunities.
“Distinguished senators, inflationary pressures are expected to decline in 2024 due to the CBN’s inflation-targeting policy, aiming to rein in inflation to 21.4 per cent at the medium term, aided by improved agricultural productivity and easing global supply chain pressures,” he said.
Cardoso continued: “Empirical analysis has established that money supply is one of the factors fueling the current inflationary pressure. For instance, an analysis of the trend of the money supply spanning over nine months shows that M3 increased from N52.01tn in January 2023 to N68.25tn in November 2023 representing N16.24tn or 31.22 per cent increase over the period.
“Increase in Net Foreign Asset following the harmonisation of exchange rates and the N3.22tn Ways and Means advances were the major factors driving the increase in money supply.”
In a seeming response to Cardoso, Mr Wale Edun said in another forum that the N22.7 trillion Ways and Means debt incurred by the Federal Government will be audited.
While agreeing with Cardoso on his observations, he said Ways and Means might be used sparingly or eventually stopped completely.
Speaking at the Public Wealth Management Conference organised by the Ministry of Finance Incorporated (MoFI), Edun said: “There was an inherited amount, N22.7 trillion backlog. We are auditing it. It is like when I am ready to pay a loan at the bank, I ask for an audit before agreeing on the sum to pay.”
Last Line
The rule of hole says if you find yourself inside a hole, the first thing to do is to stop digging. President Tinubu and his enforcers – Edun and Cardoso – are very conversant with this golden rule. That was why the moment the President put the team together, the first thing they did was to put a stop to the madness of the recent past, draw a line and begin to act according to the rules.
President Tinubu is providing the inspiration and political will. Edun is providing the strategy while Cardoso is putting in the energy to professionalise and standardise the operations of the apex Bank in the interest of Nigeria and Nigerians.
Abdulrahman Abdulraheem is the author of “eNaira Revolution: A Peep into Nigeria’s Cashless Future.”
