CBN Borrowing: When Government Acts Unlawfully  



Where is Nigeria headed to? The truth, they say, is often bitter. And, to be candid, Nigeria seems to be heading nowhere, if we do not get the right type of governance to rescue us, come May 29, 2023. 

It would be an unacceptable excuse from the incoming administration, to say that they didn’t know how terrible the condition of the country was, before they took over the mantle of leadership. Aside from the improvement in the road and rail networks, and electoral reform undertaken by this administration, little has been achieved. And, anybody who says that they want to build upon the legacy of this outgoing administration, will be asserting that they want to build upon a legacy of executive failure, opaqueness and inefficiency in governance, broken campaign promises and governmental recklessness plus law breaking. 

Zainab Ahmed v Governor Godwin Obaseki 

In April 2021, a section of an editorial that I wrote titled “Zainab Ahmed v Godwin  Obaseki”, in which I had discussed the fact that Governor Obaseki had accused the Federal Government of printing N50-60 billion to make the March 2021 FACC disbursements, which the Minister of Finance denied vehemently. In the said editorial, I then asked: “Who is telling the truth? The Governor of Edo State or the Minister? For the sake of Nigeria, with all due respect to the Governor, I hope the Minister is the one telling the truth”. It turns out that with the revelation that the Federal Government is indebted to the Central Bank of Nigeria (CBN) in Ways and Means Financing (W&M) to the tune of N22 trillion, the only logical conclusion we can draw is that Governor Obaseki was the one telling the truth! 

The huge debt mounted by Government via W&M, is just one prime example of executive recklessness and law breaking. It also shows that the Debt Management Office (DMO) and the Fiscal Responsibility Commission (FRC), are obviously not doing their jobs. 

Field Marshal Idi Amin Dada, ‘Conqueror of the British Empire’!

I remember the 1981 movie, ‘Rise and Fall of Idi Amin’, about the mad, narcissistic Ugandan military dictator who ruled his country in such a brutal way from 1971 until 1979, when he was deposed and was constrained to go into exile, finally ending up in Saudi Arabia where he died in 2003. My older brother, Demola and I were fascinated by that movie, and we watched it uncountable times. For some inexplicable reason, Idi Amin loved to refer to himself as Conqueror of the British Empire.

In reality, Idi Amin, aside from murdering hundreds of thousands of innocent people (perceived enemies etc), plundered and ruined Uganda’s economy. But, because people were so frightened of him, no one was brave enough to share the news of his destruction of the economy with him, aside from a Finance Minister who informed him that the Ugandan “government coffers were empty”, and later had to run from Uganda to England to take refuge. Amin’s response to him, was that the Ministers were stupid, and they should print more money! However, in the movie, this particular money-printing event was depicted in a more dramatic way. Amin visited the CBU (Central Bank of Uganda) to ask for $1 million for an “Intelligence Mission”. The CBU Governor informed him that there was no money, that they were having problems with their suppliers of foreign currency because “the Ugandan Shillings are worth less than toilet paper”; to which Amin responded “You call Ugandan money, s…t money?” and automatically instructed his killer squad to  “Take Governor here outside, and show him what we do to s….t!” – meaning execute the CBU Governor. He promptly appointed a random clerk who happened to be present and was physically shaking with fear, as the new CBU Governor, and asked whether he would print more money, to which he quickly responded in the affirmative,” as much money as you need Sir!”. 

While our economy and the value of the Naira is not yet in the league of Amin’s worthless Ugandan Shilling, our currency has been on a steady decline in value over the last eight years or more, our economy is certainly far from being in good shape, and our CBN Governor is only wanted by the DSS, unlike the CBU Governor who was executed in the movie. Nigeria, which was once the largest and fastest growing economy in Africa, is now a shadow of its former self, with Nigeria being classified as the Poverty Capital of the World. Our National debt is possibly the highest it has ever been in the history of the country, with the Federal Government even owing the CBN N22 trillion in unsecured advances, W&M – that is, printing of currency to finance deficiencies in budget revenue. 

CBN Act 2007

The Central Bank Act 2007 (CBN Act) is the pertinent law here. W&M is permitted by the CBN Act, but subject to certain conditions. W&M is a way in which the Federal Government raises funds, by borrowing from the Central Bank (and the CBN provides the financing by printing currency without backing); and Section 38 of the CBN Act, provides for this process. 

Section 38(2) & (3) of the CBN Act provides that, W&M shall not exceed 5% of the previous year’s revenue of the Federal Government. So, for example, if the Federal Government’s revenue was N100 in 2020, W&M in 2021, lawfully must not exceed N5; and if that N5 remained unpaid by the end of the 2021 financial year, the law does not permit CBN to lend the Federal Government any other such W&M advance in 2022. Clearly, between the CBN and the Federal Government, Section 38 of the CBN Act has been observed in the breach, as the W&M financing has not only been advanced annually as a matter of course without repayment of previous year(s) debts, it is certainly not tied to the 5% revenue of the previous year – it has continuously exceeded that ceiling. 

It is pertinent to note that, the words “shall” and “shall not” are used copiously in Section 38 of the CBN Act. In Ugwu v Ararume 2007 12 N.W.L.R. Part 1048 Page 367 at 441-442 per Niki Tobi JSC the Supreme Court held that when the word ‘shall’ is used in a statutory provision, it means that something must be done; it is mandatory, a command. In the same vein, ‘shall not’ is a command that a thing must not be done. The conditions set out in Section 38 of the CBN Act, are mandatory. Therefore, again, just as the W&M shall not exceed 5% and it shall not be given if the previous advance hasn’t been repaid before the end of the financial year it was borrowed, so also does Section 38(3)(b) of the CBN Act mandates that there shall not be securitisation of W&M advances. The W&M financing is an unsecured advance, which does not fall within the purview of  Section 29 (of the CBN Act) advances which are secured by different means like Treasury Bills, Gold coins or Bullion etc. Yet, there is talk about the President approving securitisation of the W&M debt, and sending it to the National Assembly for assent. This act would be one more unlawful action perpetrated by those involved in it, since it is contrary to Section 38 (3)(b) of the CBN Act. It will be interesting to see, if the National Assembly will assent to the President’s clearly unlawful request, when it has no power to do so!

Debt Management Office & Fiscal Responsibility Commission

The DMO and the FRC have obviously gone to sleep, since as we can see, our national debt has been mismanaged and our national expenditure is obviously far from prudent or sensible. The FRC whose function is inter alia, to promote the Section 16 economic objectives of the 1999 Constitution of the Federal Republic of Nigeria and disseminate such standard practices, including international best practices that will result in greater efficiency in allocation and management of public expenditure and debt control, has not been heard from in the face of fiscal irresponsibility (see Sections 3 of the Fiscal Responsibility Commission Act 2007 (FRA)). 

Government is running afoul of Section 12 of the FRA, as the aggregate expenditure for the financial year shall not be more than the estimated aggregate revenue plus a deficit not exceeding 3% of the estimated GDP.  We are now in the region of exceeding between 4% – 5% of estimated GDP. Section 12(2) of the FRA, however, sets out a proviso whereby the 3% ceiling can be exceeded, if the President believes that there’s a clear and present threat to national security or the sovereignty of Nigeria. In our case, even though we do have security issues, the reason for the excesses are more connected with consumption – frivolous expenditure like N3 trillion subsidy for the next six months and a high cost of governance, amongst other reckless expenditures. For instance, it has been long established that Nigerians are no longer buying fuel at the old subsidised rate, so who is benefiting from the subsidy that Government insists on holding on to till they leave office, since it is not the people?

One wonders whether many of the government agencies and their officials understand the purview of their instructions, or their functions, let alone being familiar with even the laws they operate under. It is strange that the Director General of the DMO would be asking for the approval of the securitisation of the W&M debt, when as the law presently stands, Section 38(3)(b) of the CBN Act unequivocally prohibits it. The law must be amended by the National Assembly, if there is to be securitisation of W&M. Surely, a Presidential approval, or simple assent by the National Assembly cannot override the law. 


Somebody asked me what sanctions public officers can face, when they engage in unlawful conduct or misconduct like that which has been outlined above. See the case of Stabilini Visinoni Ltd v Mallinson & Partners Ltd 2014 12 N.W.L.R. Part 1420 Page 134 at 186 per Amina Adamu Augie JCA (as she then was) where the Court of Appeal stated thus: “The word misconduct….is defined in Black’s Law Dictionary 9th Ed, as ‘a dereliction of duty, unlawful or improper behaviour”. See also Egwu v Uniport 1995 8 N.W.L.R. Part 414 Page 419 at 443 per Muntaka-Coomassie JCA. If their conduct is criminal, they can face criminal prosecution.

However, it could be that engaging in such acts of giving W&M advances contrary to Section 38 of the CBN Act, may only fall within the purview of the  Fifth Schedule Part 1 Code of Conduct for Public Officers  Paragraph 9 – abuse of powers, and such Officer who has breached this Code shall be reported to the Code of Conduct Bureau. A Public Officer who is subsequently brought before the Code of Conduct Tribunal for breaching the Code of Conduct may face several punishments, inter alia, like vacation of office, or seizure of property acquired in abuse or corruption of office.

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