The CBN’s newly revealed Monetary, Credit, Foreign Trade, and Exchange Policy Guidelines for Fiscal Years 2024-2025 outline plans to integrate eNaira into government payment systems.

This initiative will enable Ministries, Departments, and Agencies (MDAs) to process payments to vendors and beneficiaries directly from their eNaira wallets.

The CBN’s strategy includes the forthcoming release of eNaira version 2.0, which is expected to enhance the currency’s functionality.

Key improvements will feature collaboration with federal and state governments and the introduction of offline capabilities and programmable money. These upgrades aim to solidify the eNaira’s role in both digital and traditional financial sectors.

Despite these advancements, the eNaira’s adoption has been low. As of March 2024, it constitutes just 0.36% of the total currency in circulation, showing limited uptake despite the CBN’s efforts to promote its use.

The CBN has previously waived transaction fees for eNaira transactions and established a minimum capital requirement for service providers to stimulate adoption. However, the International Monetary Fund (IMF) has critiqued the slow growth in eNaira wallet downloads, revealing the struggle in gaining user acceptance.

Alongside these developments, the CBN has reiterated its focus on maintaining the Ways and Means Advances to the federal government at a 5% threshold for the fiscal years 2024-2025.

This policy allows the CBN to provide short-term financing to cover budget deficits, capped at 5% of the previous year’s revenue. Advances must be repaid within the fiscal year to avoid long-term fiscal burdens.

The policy now includes provisions for calculating these advances by incorporating sub-accounts of MDAs linked to the Consolidated Revenue Fund, aligning with the Treasury Single Account (TSA) framework. This adjustment aims to provide a more accurate assessment of the federal government’s cash position.

Recent legislative actions have seen proposals to increase the Ways and Means threshold to 10%, a move that has raised concerns about potential inflationary impacts and economic stability.

Critics, including CBN Monetary Policy Committee member Murtala Sabo Sagagi, argue that such an increase could lead to excessive liquidity and exacerbate inflationary pressures.

In response to previous misuse and controversy surrounding the Ways and Means facility, the CBN has taken steps to address these issues. This includes restructuring outstanding loans and halting further advances until previous amounts are repaid.

Finance Minister Wale Edun has confirmed that the federal government has repaid N7.3 trillion in advances, a significant step in managing the country’s fiscal challenges.

This approval was initiated after the Senate considered the report from its ad hoc committee, which explained how the Nigerian Government had repeatedly borrowed from the CBN in the process exceeding the five percent threshold of the previous year’s revenue as stipulated by the CBN Act.

Buhari had last year asked the Senate to approve his proposal to securitize the loan but the Red Chamber rejected the request, citing a lack of details.

Buhari, while appealing to the Senate to reconsider its stand, said failure to grant the securitization approval will cost the government about N1.8tn in additional interest in 2023.

Presenting the report, the senate leader, Ibrahim Gobir, said: “Part of the Ways and Means monies were given to State Governments as loans to augment budgetary shortfall in their various States.

Mr. President received the majority of the funding requests for an increase in Ways and Means related to the need to finance the budget because of a revenue shortfall. These demands were either made by the Central Bank Governor or the Honorable Minister of Finance, Budget, and National Planning.

Due to income deficits brought on by the COVID-19 epidemic and low oil prices, the Federal Government largely relied on the Ways and Means to finance its budget deficit to keep the nation operating for the benefit of its citizens.

The Federal Government used the funds it received to finance important national initiatives.

The Federal Government was forced to continually borrow money from the CBN to keep the economy from collapsing due to the severe shortfall in government revenue, exceeding the CBN Act of 2007’s 5 percent revenue threshold.

It has finalized preparations to convert CBN loans into tradable securities like treasury bills and bond issuance through the Ministry of Finance, Budget, and National Planning.

This is according to a statement issued on Thursday by the Debt Management Office (DMO) in Abuja.

As stated by the DMO, the country’s total public debt stock included the Federal Government of Nigeria (FGN) and sub-national governments’ domestic and external debts.

Sub-national governments include the 36 state governments and the Federal Capital Territory (FCT).

As for the Ways and Means advances, they are presently awaiting securitization by the National Assembly, and can only be added to the country’s public debt after such securitization.

The comparative debt stock as of December 31, 2021, is N 39.59 trillion (95.77 billion dollars). Domestic debt totaled N27.55 trillion (61.42 billion dollars), while external debt totaled N18.70 trillion (41.69 billion dollars).

“Among the reasons for the increase in total public debt stock were new borrowings by the Federal Government and sub-national governments, primarily to finance budget deficits and execute projects.

“The issuance of promissory notes by the Federal Government to settle some liabilities also contributed to growth in the debt stock,’’ the official said.

It, however, said that ongoing efforts by the Federal Government to increase revenue from oil and non-oil sources through initiatives like the Finance Acts and the Strategic Revenue Mobilisation Initiative are expected to support debt sustainability.

“Meanwhile, the total debt-to- Gross Domestic Product (GDP) ratio for Dec. 31, 2022, was 23.20 percent. It indicates a slight increase from the figure of Dec. 31, 2021, at 22.47 percent.

“The ratio of 23.20 percent is within the 40 percent limit self-imposed by Nigeria and the 55 percent limit recommended by World Bank/International Monetary Fund (IMF).

“It is also within the 70 percent limit recommended by the Economic Community of West African States (ECOWAS),’’ it said.

While the House authorized the restructuring of N1 trillion WMAs, lawmakers declined the CBN’s request for N22,719,703,774,306.90.

Ways and Means Advances is a loan facility used by the central bank to finance the government in periods of temporary budget shortfalls subject to limits imposed by law

This was based on the Joint Committees on Finance, Banking, and Currency, and Aids, Loans, and Debts Management’s recommendations, which were laid, debated and adopted by the House in plenary.

Musa Abdullahi, Deputy Chairman of the House Committee on Finance, presented the report.

The report partly read, “Based on the observations and the exigencies of the Federal Government’s current fiscal situation, the committees Recommends the following:

“(i) The approval of the requested restructuring of the N1 trillion additional Ways and Means Advances for implementation of the 2022 Supplementary Appropriations Act as passed by the National Assembly.

“(ii) Further engagement with the executive by the Joint Committee to allow for a thorough and detailed work and submissions on the larger part of the advances, which amounts to N22,719,703,774,306.90 only.”

On December 21, 2022, President of the Senate, Ahmad Lawan; and Speaker of the House, Femi Gbajabiamila, read out Buhari’s request to members of the respective chambers.

In the request titled ‘Restructuring of Ways and Means Advances,’ the President wrote, “The Ways and Means Advance by the Central Bank of Nigeria to the Federal Government has been a funding option to the Federal Government to cater for short-term or emergency finance to fund delayed government expected cash receipt of fiscal deficit.

“The Ways and Means balances as of 19th December 2022, is N23,719,703,774,306.90

“I have approved the securitization of the Ways and Means balances along the following terms: amount, N23.7tn; tenure, 40 years; moratorium on principal repayment, 3 years; pricing interest rate, 9 percent.

“Your concurrence and approval are sought to allow for the implementation of the same.”

Consideration of the presidential was stalled at the Senate as the proposal met stiff opposition in the chamber.

President of the Senate, Ahmad Lawan, after meeting with Buhari, had said the lawmakers would reconsider the request and pass the WMAs.