Paragraph 1: Unveiling the Allegations of Misappropriation
The Nigerian Federal Government has leveled serious accusations against the Central Bank of Nigeria (CBN), alleging the misappropriation of a staggering N2.73 trillion in interest payments stemming from Ways and Means advances. This revelation, unearthed in the Federal Government’s consolidated financial statement for 2021, has sparked significant concerns regarding the management of public funds. The Ways and Means facility, a mechanism designed to provide temporary financial support to the government in bridging budget deficits, has become the focal point of this controversy. The core of the accusation revolves around the CBN’s alleged retention of interest charges accrued from these advances, reportedly utilizing these funds for its own benefit rather than remitting them to the Consolidated Revenue Fund (CRF) as mandated by law.
Paragraph 2: The Constitutional and Regulatory Framework
The gravity of the allegations is amplified by the clear legal framework governing the management of public funds in Nigeria. The Constitution of the Federal Republic of Nigeria, 1999 (as amended), alongside the Financial Regulations of 2009, explicitly prohibit unauthorized withdrawals from the CRF and the operation of overdrawn government accounts. Section 80(2) of the Constitution unequivocally states that withdrawals from the CRF require prior approval through an appropriation act or a supplementary act. Furthermore, paragraph 710 of the Financial Regulations specifically forbids overdrafts and mandates the refund of any incurred interest. These legal provisions underscore the seriousness of the alleged financial irregularities and the potential breach of established protocols.
Paragraph 3: Dissecting the CRF’s Negative Balance
The 2021 audit report reveals a troubling financial picture, highlighting a significant negative balance in the CRF amounting to N17.1 trillion. This substantial deficit comprises several components, including N9.41 trillion attributed to reconciled domestic debt service, N4.45 trillion related to Ways and Means withdrawals, and N483.97 billion from Paris Club loan refunds. Further contributing to the negative balance are deferred state loan deductions and CPV coupon payments. The audit report explicitly identifies the inclusion of the N4.4 trillion Ways and Means advance and the contested N2.73 trillion in interest charges within this negative balance, raising questions about the legality and propriety of these transactions.
Paragraph 4: The Government’s Response and Demands
The Federal Government, in response to the audit findings, has directly accused the CBN of mismanagement of the Ways and Means facility. It contends that the CBN has erroneously treated the advances as if they were conventional loans originating from its own balance sheet or secured through syndicated lending arrangements, both domestic and international. This mischaracterization, the government argues, has led to the improper retention of N2.73 trillion in interest charges. The government has unequivocally demanded the immediate refund of this substantial sum to the CRF, emphasizing that the interest accrued on Ways and Means advances should not be treated as revenue by the CBN. Furthermore, the government has instructed that these interest charges should not be securitized, diverging from the treatment of other overdraft components being managed by the Debt Management Office.
Paragraph 5: The Auditor-General’s Stance and Recommendations
The Office of the Auditor-General, having reviewed the government’s response and supporting documentation, maintains its initial findings regarding the financial irregularities. The Auditor-General’s office asserts that the findings remain valid until the Federal Government furnishes conclusive evidence of proper approvals and documentation for the transactions in question. To address the identified issues, the Auditor-General has recommended that the Accountant-General of the Federation provide a comprehensive justification for the N17.1 trillion overdraft to the Public Accounts Committees of the National Assembly. Furthermore, the Auditor-General has urged the enforcement of sanctions as stipulated in paragraph 3106 of the Financial Regulations, specifically targeting irregular payments made from public funds.
Paragraph 6: Systemic Weaknesses and Potential Risks
The audit report attributes the observed financial irregularities to weaknesses within the internal control processes at the Office of the Accountant-General of the Federation. This lapse in oversight is identified as a significant risk to the integrity of public finance management. The report warns that the unauthorized financing of expenditures, coupled with avoidable interest payments, exposes the government to unnecessary fiscal burdens. The potential implications of these financial mismanagement practices extend beyond immediate budgetary concerns, raising broader questions about transparency and accountability in the handling of public resources. The findings underscore the need for strengthened internal controls and stricter adherence to established financial regulations to safeguard public funds and maintain fiscal stability.
