The Nigerian Senate has embarked on a significant endeavor to investigate the disbursement and utilization of N30 trillion in “Ways and Means” loans acquired from the Central Bank of Nigeria (CBN) over the past decade.
This decision, prompted by concerns over fiscal transparency and monetary policy effectiveness, underscores the Senate’s commitment to ensuring accountability and sustainability in financial management practices.
“Ways and Means” loans, characterized as short-term advances provided by the CBN to the Federal Government, serve to address immediate cash flow needs arising from fiscal deficits or emergencies. However, questions surrounding the accountability and long-term implications of this financing mechanism have prompted calls for enhanced oversight and scrutiny.
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Senator Abdullahi Yahaya Abubakar, leading the Joint Committees on Banking, Insurance and Other Financial Institutions, Finance, National Planning, Agriculture, and Appropriation, noted the need to conduct a thorough evaluation of the Ways and Means program. He emphasized the urgency of prioritizing the repayment of these loans to mitigate long-term financial risks and ensure fiscal stability.
“The persistent inflationary trend and the fall of the naira underscore the urgency for proactive measures. The findings from the session illuminate the multifaceted factors contributing to these challenges. As this report indicates, a collaborative effort between the Executive and the legislature, and between the fiscal and monetary authorities is imperative to mitigate the risks associated with a potential hyperinflation and the crash of the naira,” the Committee in its conclusion said.
Furthermore, the Senate’s inquiry extends to other intervention programs, including the Anchor Borrower program, with a focus on identifying potential loopholes and enhancing future development finance activities.
By scrutinizing these initiatives, lawmakers aim to bolster transparency, accountability, and effectiveness in the management of public funds.
Of particular concern to the Senate is the impact of forex transactions on the economy, especially following the recent revision of rate calculation methodologies by the Financial Markets Dealers Quotations (FMDQ).
The significant increase in exchange rates has raised alarms regarding its adverse effects on investments, job security, and economic agents with foreign currency exposure. Consequently, the Senate intends to investigate these developments to safeguard stakeholders’ interests and mitigate potential risks.
President of the Senate, Senator Godswill Akpabio, said it is imperative to hold stakeholders accountable for their financial management practices. He reiterated the Senate’s commitment to conducting a comprehensive probe into the Ways and Means program, emphasizing transparency and adherence to legal frameworks.
Acknowledging the challenges posed by previous financial decisions, Akpabio stressed the importance of rectifying past mistakes to ensure sustainable economic growth. He reaffirmed the Senate’s mandate to uphold principles of accountability and good governance, emphasizing the necessity of thorough investigations and informed decision-making.
“We are where we are today as a result of illegal things and I think it is necessary that details of Ways and Means be provided,” the Senate President said.
However, dissent arose during the Senate’s deliberations, with Senator Ali Ndume questioning the legality of approving funds that had already been expended. He argued that retroactively approving expenditures lacked constitutional basis and demanded greater transparency regarding fund utilization.
“Mr President, I was not part of the plenary that gave the nod for Ways and Means but the detail of funds spent was not provided. This is illegal,” he said.
In response, Senator Mohammed Danjuma Goje defended the Senate’s authority to oversee fiscal matters, citing its constitutional mandate. He said there is a need to conduct investigations to ensure accountability and address concerns raised by the public and stakeholders.
By scrutinizing past financial practices and identifying areas for improvement, the Senate aims to strengthen the country’s fiscal resilience and promote sustainable economic development.
Under the administration of former president Muhammadu Buhari, the Central Bank of Nigeria under governor Godwin Emefiele issued about N23 trillion in loans to the federal government under Ways and Means. Nigeria’s rising inflation has been largely attributed to these loans.