Being the text of a letter titled "Proposed Senate Approval of CBN Ways and Means Financing for FGN" by Adetilewa A. Adebajo, Managing Director/CEO, The CFG Advisory
We refer to the letter from the President seeking approval from the senate, for the restructuring and securitization of =N=23.7 Trillion of illegal ways and means advances obtained by the FGN from the Central Bank of Nigeria. We also recall the public hearing on the matter late last year, that resulted in a rowdy session, when you tried to step down Senator Betty Apaiafi, who objected to the request as unconstitutional. Then senate then went into a closed-door session, after which it was announced that the request has been stepped down.
Sir, I wish to refer you to the CBN Act in particular Section 38. Given Nigeria’s current revenue profile, the limit of ways and means financing by law cannot be more than =N=1Trillion. The CBN board also reports directly to the President. The first question we need to ask is who gave the CBN Governor the approval to break the law in a sustained manner for the last 6 years that he exceeded his ways and means limits by a whopping =N=22.7 Trillion? The second question sir, is where is the provision in the CBN Act or any other Act including the Fiscal Responsibility Act that gives Mr. President any powers to securitize ways and means financing, let alone send a request to the senate for approval?
Sir, Section 38 (2) of The CBN Act is clear that “The Total amount of such advances outstanding shall not at any time exceed five percent of the previous year’s actual revenue of the Federal Government”. The current level of ways and means financing at =N=23.7 Trillion are excessive in violation of this limit.
Sir, Section 38 (3a) of the CBN Act says all advances shall be repaid “as soon as possible and shall in any event be repayable by the end of the Federal Government Financial year in which they are granted and if such advances remain unpaid at the end of the year, the power of the Bank to grant such further advances in any subsequent year shall not be exercisable, unless the outstanding advances have been repaid” The ways and means advances have not been repaid for the last six years, on the contrary they have been increasing, in clear violation of this clause.
Sir, Section 38 (3b) of the CBN Act “in such form as the Bank may determine provided that no repayment shall take the form of a promissory note or such other promise to pay at a future date or securitization by the way of issuance of treasury bills, bonds certificates and other forms of security which will be required to be underwritten by the Bank”
Sir, as The Chief Oversight Officer of The Federal Republic of Nigeria, why would you entertain a ways and means advances securitization request from Mr. President in violation of this clause?
Sir, as you reconvene to reconsider this important issue, it’s important that you realise that the President is in violation of both the CBN and fiscal responsibility Acts. These acts were designed as Financial Circuit Breakers to protect the fiscal regime. As a result of breaking these laws, we now have runawy inflation, high interest rates and a government that is now in a debt trap. Over 100% of revenues are now going towards debt service and we are now borrowing to fund recurrent expenditure. Our debt profile was only US$50Billion 6 years ago today its approaching US$200Billion and this is not a sustainable strategy.
Sir I write to you as a patriotic Nigerian, as I have expressed my views and proffered viable solutions on several medial channels. I also remain committed to attending your public hearings and contribute to any process that you determine will resolve the situation. Sir, the time is past due for us to confront these issues head on. However, in order for resolution to be credible and effective, we must first bring the offenders to book.
Sir, my respectful submission as I thank you for your kind attention.
While we await your response, please sir kindly accept the assurances of our highest regards.