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Spotlight Stories

Further Proof That CBN May Have ‘Illegally’ Loaned Buhari Govt

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CBN Gov Godiwn Emefiele

The former Central Bank Governor and Emir of Kano Sanisi Lamido Sanusi gave a speech last week that has raised feathers. The Emir accused the CBN of contravening section 38.2 of the CBN act by borrowing more than the required threshold to the Federal Government. Here is Sanusi again;

In fact one could argue their relationship has become unhealthy. CBN claims on the FGN now top N4.7trn – equal to almost 50% of the FGN’s total domestic debts.

This is a clear violation of the Central Bank Act of 2007 (Section 38.2) which caps advances to the FGN at 5% of last year’s revenues. The overdrafts alone are equal to more than 10x that prescribed limit, and are growing every month.

The government has tried to rebuff this claim, which we argued in an earlier article that it falls flat when pit against the real issues. Now things appear even more sinister for the CBN as we dig deeper to determine what exactly had happened. One of our analysts took a further look into the Budget Implementation report of 2015, Published by the Budget Office and found out something even more worrying.

It appears though, that the government in connivance with the CBN may have all the while deliberately contravened the provisions of the act. Otherwise, how else can you explain this statement in the budget implementation report;

As our banker the FGN is entitle to raise credit from the CBN through the mechanism of ways and means subject to 12.5% of FGN’s revenue. This amount will be retired and therefore not considered as new borrowing outside the borrowing approved to finance budget deficit.

This basically means the government can borrow money from the CBN, in the event that they they have short term cash shortfalls.

Two issues arise here.

One, the government admits correctly that it is entitled to borrow from the CBN if it encounters a budget short-fall. However, it opines the threshold is 12.5% instead of 5% as clearly indicated in section 38.2 of the CBN Act 2007 (same as the 2004 act). Where they got the 12.5% figure baffles us. Could it be that they are not aware of the provisions of the act or are is someone being mischievous with the law hoping that we won’t see it? Or are they reading from an act older than 2004?

Law against lending higher than 5%

Law against lending higher than 5%

The writers of the act, believed that the government will always earn revenue to repay within a short period and as such deemed it fit to provide a buffer in the event of a delay in earning revenues or a temporary revenue shortfall. The current government (by the way, it appears GEJ Government also violated the act), however, sees this differently. The CBN is a license to print money at will.

Secondly, the provisions of the act also mandates the government to refund the loans within the fiscal year and failure to do so means the CBN has no further powers to extend further loans to the government. It is unclear whether the CBN has been refunded at any point in time. Nevertheless, it appears it had gone on to increase lending to over N4 trillion according to Sanusi. Data from the government shows advances toped N657 billion in 2015 which by the way was more than 20% FG revenue (all under Emefiele).

2015 Actual Budget

2015 Actual Budget

Potential concern for the CBN Governor?

This posses a big problem for the CBN Governor. Critics of the CBN Governor opine that a contravention of this act could trigger Section 11C of the CBN Act which relates to his removal from office. This of course depends on whether the National Assembly sees this violation of the act as a “gross misconduct” and if the FG believes so too. No one knows for sure how this will end as we understand that the Emir is now being perceived as directly attacking the Buhari Government.

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Nairametrics is Nigeria's top business news and financial analysis website. We focus on providing resources that help small businesses and retail investors make better investing decisions. Nairametrics is updated daily by a team of professionals. Post updated as "Nairametrics" are published by our Editorial Board.

1 Comment

1 Comment

  1. Anodebenze

    December 7, 2016 at 2:17 pm

    We the people of Nigeria are represented by elected politicians.WHO THE FU-K TO SAY THE CBN IS ILLEGALLY LENDING MONEY TO FED GOVT.wa do not have a constutional court to decided on this legalitiesTHE ONLY PERSON OR GROUP TO COMPLAIN ON THE LEGALITY OF THE CBN LENDING TO THE FED GOVT IS THE NATIONAL ASSEMBLY AND THEY HAVE NOT COMPLAINED
    iT IS BULLSH–T,if it comes it will come to supreme court,the executive arm of the govt will argue on (1) national security (2) public interest e.t.c judges on this anglosaxon legal system have about 3 standard or parameter on what they will bases their judgement, one of them is (1) literally interpretation (2) golden rule.
    In this literally interpretation,the judges will interpretes the law as it is, on prima facia (2) golden rule,they interpretes the law on the spirit of the law,they will take the law holistic,if the law is weak in enforcement or the drafting is faulted. e.g when a judge knows the criminal did it,but evidence against him is weak. or the prosecutors did a shoddy job,they will jail the motherfu–ker.let him rot in jailnow when you read lord denning of England,you finds,his summary of judgement is not based on legal issues but political.take this recent us supreme court on obamacare,the judges knew the drafting of the law is faulty,if they throws away this act, 28 millions of America will be without medical treatment,they applied golden rule,as medical treatment in America is very expensive.
    The fed govt will win the public opinion and the legal argument.NOW WHAT ARE THE ANNUAL DEFICIT OF STATES BUDGET OR LOCAL GOVT AREA ANNUAL BUDGET, almost nil can govt pushes their communities economic growth or facilities their economic growth.THE CENTRE IS TOO POWERFUL.the argument here is if they are allowed to have a deficit in annual budget about 25 % or 50 %,all this talk about Chinese debt can be a thing of the past,the fed govt will concentrate on unity defence,and makes most of their strategy for the state glory or/for will be on international politics.
    when thermcool,a fridge maker,i think they are located in port harcourt saw the govt awarded contract for liquidified gas ship to be built in korea.thermocool said what the fu–k is this ” YES WE CAN DO IT ” YES WE CAN DO IT IN NIGERIA,JUST GIVE US THE BLOODY MONEY WE WILL DO IT IN NIGERIA, mantra just like president Obama of america, yes we can do it, a mixed American can win the white house,bur thermocool was before Obama.
    Maglev train is simply when 2 magnet placed opposite,repeals,which will lift the train, and the forces of gravity and the weight is halved,and you can built an engine powerful electrical engine,controlled by computer or software application.you can get a minimum of 150 miles an hour

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Coronavirus

COVID-19 Update in Nigeria

On the 5th of March 2021, 371 new confirmed cases and 3 deaths were recorded in Nigeria

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Covid 19 update symptops

The spread of novel Corona Virus Disease (COVID-19) in Nigeria continues to record significant increases as the latest statistics provided by the Nigeria Centre for Disease Control reveal Nigeria now has 158,042 confirmed cases.

On the 5th of March 2021, 371 new confirmed cases and 3 deaths were recorded in Nigeria.

To date, 158,042 cases have been confirmed, 137,025 cases have been discharged and 1,954 deaths have been recorded in 36 states and the Federal Capital Territory.

A total of 1.54 million tests have been carried out as of March 5th, 2021 compared to 1.49 million tests a day earlier.

COVID-19 Case Updates- 5th March 2021,

  • Total Number of Cases – 158,042
  • Total Number Discharged – 137,025
  • Total Deaths – 1,954
  • Total Tests Carried out – 1,544,008

According to the NCDC, the 371 new cases are reported from 20 states- Lagos (101), Rivers (54), Anambra (31), Ebonyi (23), Imo (23), Kwara (22), Kano (20), Taraba (17), Akwa Ibom (16), FCT (15), Abia (13), Kaduna (13), Osun (5), Edo (4), Oyo (4), Kebbi (3), Ogun (3), Ekiti (2), Nasarawa (1), and Zamfara (1).

Meanwhile, the latest numbers bring Lagos state total confirmed cases to 56,374, followed by Abuja (19,328), Plateau (8,939), Kaduna (8,623),  Oyo (6,761), Rivers (6,651), Edo (4,645), Ogun (4,419), Kano (3,830), Ondo (3,066), Kwara (2,953), Delta (2,582), Osun (2,449), Nasarawa (2,248), Enugu (2,078), Katsina (2,060), Gombe (2,010), Ebonyi (1,951), Anambra (1,811), Akwa Ibom (1,588), and Abia (1,568).

Imo State has recorded 1,551 cases, Borno (1,297), Bauchi (1,232), Benue (1,188), Adamawa (942), Niger (917), Taraba (863), Ekiti (825), Bayelsa (779), Sokoto (769), Jigawa (496), Kebbi (401), Cross River (334), Yobe (288), Zamfara (221), while Kogi state has recorded 5 cases only.

READ ALSO: COVID-19: Western diplomats warn of disease explosion, poor handling by government

Lock Down and Curfew

In a move to combat the spread of the pandemic disease, President Muhammadu Buhari directed the cessation of all movements in Lagos and the FCT for an initial period of 14 days, which took effect from 11 pm on Monday, 30th March 2020.

The movement restriction, which was extended by another two weeks period, has been partially put on hold with some businesses commencing operations from May 4. On April 27th, 2020, Nigeria’s President, Muhammadu Buhari declared an overnight curfew from 8 pm to 6 am across the country, as part of new measures to contain the spread of the COVID-19. This comes along with the phased and gradual easing of lockdown measures in FCT, Lagos, and Ogun States, which took effect from Saturday, 2nd May 2020, at 9 am.

On Monday, 29th June 2020 the federal government extended the second phase of the eased lockdown by 4 weeks and approved interstate movement outside curfew hours with effect from July 1, 2020. Also, on Monday 27th July 2020, the federal government extended the second phase of eased lockdown by an additional one week.

On Thursday, 6th August 2020 the federal government through the secretary to the Government of the Federation (SGF) and Chairman of the Presidential Task Force (PTF) on COVID-19 announced the extension of the second phase of eased lockdown by another four (4) weeks.

Governor Babajide Sanwo-Olu of Lagos State announced the closed down of the Eti-Osa Isolation Centre, with effect from Friday, 31st July 2020. He also mentioned that the Agidingbi Isolation Centre would also be closed and the patients relocated to a large capacity centre.

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Due to the increased number of covid-19 cases in Nigeria, the Nigerian government ordered the reopening of Isolation and treatment centres in the country on Thursday, 10th December 2020.

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On 26th January 2021, the Federal Government announced the extension of the guidelines of phase 3 of the eased lockdown by one month following the rising cases of the coronavirus disease in the country and the expiration of phase 3 of the eased lockdown.

On 28th February 2021, the federal government confirmed that the first tranche of Covid-19 vaccines will arrive in Nigeria on Tuesday, March 2nd, 2021.

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READ ALSO: Bill Gates says Trump’s WHO funding suspension is dangerous

 

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Hospitality & Travel

MMA2 imports new x-ray machines from US

MMA2, Lagos took delivery of new x-ray machines ordered by Bi-Courtney Aviation Services Limited (BASL) to upgrade its facilities.

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The Murtala Muhammed Airport, Terminal 2, Lagos has taken delivery of new x-ray machines ordered by Bi-Courtney Aviation Services Limited (BASL) to upgrade its facilities on Friday.

This was disclosed by the Group Corporate Affairs Manager of BASL, operator of MMA2, Mikail Mumuni, in a statement on Friday.

He said, “The equipment imported from the US arrived the Murtala Muhammed International Airport, Lagos Wednesday night from where they were later moved to MMA2.

”Installation of the x-ray machines and air conditioners will commence on Friday evening and that this would be completed within one week.”

The BASL spokesperson quoted the acting Head of Business of the company, Mr. Ralph Uchegbu as saying that “the installation of the new X-ray machines and air conditionals will further reinforce the status of MMA2 as the nation’s pre-eminent airport terminal in terms of customers security and comfort.”

What you should know

  • BASL recently announced that it had invested over $500,000 massive upgrading of its X-ray machines and air conditioning systems for passengers safety, security and comfort.

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