How Buhari administration has overdrawn CBN account by $25bn

The Socio-Economic Rights and Accountability Project (SERAP) has accused the President Muhammadu Buhari-led administration of borrowing $25bn from the Central Bank of Nigeria via overdrafts and loans since 2015, and also demanded for an account on how the money was spent.

In the Freedom of Information request dated 6 March, 2021 and signed by SERAP deputy director Kolawole Oluwadare, the organization requested for details of the total overdrafts, the projects on which the overdrafts have been spent; repayment of all overdrafts to date, as well as to clarify whether the $25bn (N9.7trn) overdraft reportedly obtained from the CBN is within the five-percent limit of the actual revenue of the government for 2020.

“Disclosing details of CBN overdrafts and repayments would enable Nigerians to hold the government to account for its fiscal management and ensure that public funds are not diverted, thereby improving the ability of your government to effectively respond to the COVID-19 crisis. This means that the government would not have to choose between saving lives or making debt payments.”

According to SERAP, “The increasing level of public debt would threaten the ability of the government to invest in essential public goods and services, such as quality education, healthcare, and clean water. It is the primary responsibility of the government to ensure public access to these services in order to lift millions of Nigerians out of poverty and to achieve the Sustainable Development Goals by 2030.”

The FoI, read in part: “We would be grateful if the requested information is provided to us within 14 days of the receipt and/or publication of this letter. If we have not heard from you by then, the Incorporated Trustees of SERAP shall take all appropriate legal actions to compel your government to comply with our request.”

“Also, the recent overdraft of $25.6bn (about N9.7trn) obtained from the CBN would appear to be above the five-percent limit of the actual revenue of the Federal Government for 2020, that is, N3.9trn, prescribed by Section 38(2) of the CBN Act 2007.

“Under the CBN Act, ‘no repayment shall take the form of a promissory note or such other promise to pay at a future date, treasury bills, bonds or other forms of security which is required to be underwritten by the Bank.’”

“According to our information, your government has reportedly recently obtained $25 billion from the CBN as overdrafts. The Federal Government has also reportedly decided to convert the overdrafts to long-term debt. This latest borrowing from the CBN is in addition to over $20 billion external debt, and N7 trillion domestic debt.”

A copy of the letter was sent to Mr. Abukabar Malami, SAN, Attorney General of the Federation and Minister of Justice; Mrs Zainab Ahmed, Minister of Finance, Budget and National Planning; Godwin Emefiele, the Governor of CBN; and Ms Patience Oniha, Director-General of the Debt Management Office.