The Central Bank of Nigeria (CBN) has issued new draft guidelines mandating banks to provide instant refunds for failed Automated Teller Machine (ATM) transactions, in what analysts see as one of the boldest steps yet to protect consumers and strengthen accountability in the financial sector.

The new rules, released on October 9, 2025, are part of broader efforts by the apex bank to restore public confidence in digital banking amid rising complaints over delayed reversals and unresponsive customer service. The circular, signed by Musa I. Jimoh, Director of the Payments System Policy Department, was addressed to banks, payment service providers, card schemes, and independent ATM deployers. Stakeholders have until October 31, 2025, to submit feedback before final adoption.

Under the draft framework, the CBN is compelling banks to automatically refund customers for any failed transactions. For on-us transactions—where customers use their own bank’s ATM—the reversal must happen instantly. However, in cases where a technical issue prevents this, the refund must be processed manually within 24 hours.

For not-on-us transactions—where customers withdraw from other banks’ ATMs—the refund window must not exceed 48 hours. The CBN also directed ATM acquirers to automatically initiate reversals without waiting for customer complaints, marking a shift toward proactive consumer protection.

This directive addresses one of the most persistent pain points in Nigeria’s financial system: customers being debited without receiving cash. Many consumers have long complained that banks take days, sometimes weeks, to refund failed ATM transactions despite electronic traceability.

The apex bank said the measure aims to “improve consumer confidence in the banking system, reduce frustration, and enhance trust in e-payment channels.”

Beyond protecting customers, analysts say the new directive could boost revenue for the government. ATM acquirers and banks have often been accused of underreporting or delaying refunds from failed transactions, shortchanging both customers and regulatory agencies in the process.

By mandating automatic reversals and closer monitoring, the CBN expects a more transparent flow of funds that will also improve data accuracy in financial reporting—thereby increasing remittances into the government purse.

The refund directive forms part of a sweeping reform of Nigeria’s ATM regulatory framework, replacing the 2020 electronic payments guidelines. The CBN said the review became necessary due to rapid technological evolution, growing cyber threats, and Nigeria’s goal of deepening financial inclusion.

Under the new policy, banks and card issuers are required to deploy one ATM for every 5,000 cards issued. The rollout will occur in phases—30% compliance by 2026, 60% by 2027, and full compliance by 2028. Any new deployment, redeployment, or decommissioning of machines will require CBN approval.

ATMs are also required to meet higher operational and security standards. They must comply with global Payment Card Industry Data Security Standards, maintain audit logs for dispute resolution, and feature clear card orientation signs. To promote inclusion, at least 2% of each bank’s ATMs must be fitted with tactile symbols for visually impaired users.

The CBN also made clear that customer convenience will be a key performance benchmark. ATMs must dispense cash before releasing cards, provide receipts when requested, allow free PIN changes, and ensure that only fit banknotes are dispensed. Operators must also provide backup power, functional helpdesk lines, and screen prompts giving users ample time to complete transactions.

To curb fraud, all ATMs must be sited in secure, well-lit locations with anti-skimming devices and surveillance cameras that capture activity without recording keystrokes.

The apex bank said it will enforce compliance through regular audits, on-site inspections, and mandatory monthly reports from all ATM operators, listing new deployments and their locations. Financial institutions that violate the new guidelines will face penalties, though specific sanctions are yet to be disclosed.

These measures come barely eight months after the CBN scrapped the three free monthly withdrawals allowed for customers using other banks’ ATMs—a policy shift that drew mixed reactions from consumers and advocacy groups.

The new draft guidelines, however, appear designed to balance regulation with consumer protection. If fully implemented, they could mark a turning point in Nigeria’s banking ecosystem—where reliability, speed, and trust have often been undermined by inefficiency and opacity.

Nigeria’s total public debt has climbed to N152.40 trillion as of June 30, 2025, according to new data from the Debt Management Office (DMO). The figure marks an increase of N3.01 trillion, or 2.01%, from N149.39 trillion at the end of March.

In dollar terms, the debt rose from $97.24 billion to $99.66 billion, reflecting a 2.49% increase in just three months.

The report shows that while borrowing has moderated compared to the previous year, the country’s debt burden continues to swell—largely because of currency depreciation and heavy reliance on domestic and external financing to cover fiscal deficits.

External Debt Sees Modest Increase

Nigeria’s external debt rose to $46.98 billion (N71.85 trillion) in June from $45.98 billion (N70.63 trillion) in March. The increase, though moderate, reinforces concerns about the country’s dependence on external lenders.

Multilateral institutions remain Nigeria’s largest creditors, with a combined exposure of $23.19 billion, accounting for nearly half of the country’s external obligations. The World Bank, through its International Development Association (IDA) arm, remains the single largest creditor with $18.04 billion outstanding.

Bilateral loans totaled $6.20 billion, led by the Export-Import Bank of China at $4.91 billion, followed by smaller exposures to France, Japan, India, and Germany. Commercial borrowings—mostly Eurobonds—accounted for $17.32 billion, representing 36.9% of the external debt.

Analysts say Nigeria’s dependence on Eurobonds and other commercial instruments exposes the country to global market volatility, especially as international investors demand higher yields amid global interest rate hikes. Meanwhile, the concentration of loans from multilateral institutions underscores Nigeria’s reliance on concessional financing, a pattern that reflects weak domestic revenue capacity.

Domestic Debt Heavily Tilted Toward Long-Term Bonds

The domestic debt stock climbed to N80.55 trillion in June from N78.76 trillion in March, an increase of N1.79 trillion. Federal Government bonds dominated the portfolio with N60.65 trillion, representing over 79% of total domestic debt.

This includes N36.52 trillion in naira-denominated bonds, N22.72 trillion in securitized Ways and Means advances—money borrowed directly from the Central Bank of Nigeria (CBN)—and N1.40 trillion in dollar bonds.

Shorter-term instruments made up a smaller share: Treasury bills accounted for N12.76 trillion (16.7%), Sukuk bonds stood at N1.29 trillion, while savings bonds, green bonds, and promissory notes amounted to N91.53 billion, N62.36 billion, and N1.73 trillion, respectively.

The sharp rise in securitized Ways and Means advances points to persistent fiscal pressure, as the government increasingly relies on borrowing to plug budget deficits rather than expand revenue. Economists warn that the trend could worsen inflationary pressures and crowd out private investment if unchecked.

Federal Government Accounts for Over 92% of Total Debt

Of the total N152.40 trillion, the Federal Government is responsible for N141.08 trillion (92.6%), comprising N64.49 trillion in external debt and N76.59 trillion in domestic obligations.

For the first time in 2025, the DMO included a detailed breakdown of subnational debt. States and the Federal Capital Territory (FCT) collectively owe $4.81 billion (N7.36 trillion) externally and N3.96 trillion domestically—bringing their total to N11.32 trillion (7.4%) of the national debt.

Currency Depreciation Inflating Debt Stock

The DMO noted that external debt was converted at the CBN’s exchange rate of N1,529.21 per dollar as of June 30, 2025. The weaker naira—compared with earlier in the year—magnified the naira value of Nigeria’s foreign debt, adding trillions to the headline figure even without significant new borrowing.

This currency effect highlights Nigeria’s vulnerability to exchange rate volatility. The more the naira weakens, the higher the country’s debt appears in domestic terms, further complicating fiscal management.

Although Nigeria’s debt-to-GDP ratio remains within international benchmarks—hovering around 45%—economists are increasingly alarmed by the rate of debt accumulation and the rising cost of servicing loans.

According to data from the Budget Office, debt servicing consumed over 80% of government revenue in the first half of 2025, leaving little fiscal room for capital projects or social programs.

The situation is more alarming as the government continues to borrow. Early this week, President Bola Tinubu wrote the National Assembly, seeking approval for a fresh external borrowing of $2.3bn. This is in addition to a plan to issue a $500m sovereign Sukuk, which will mark Nigeria’s debut in the international Islamic finance market.

The request, contained in a letter read on the floor of the House of Representatives by Speaker Tajudeen Abbas on Tuesday, complies with Sections 21(1) and 27(1) of the Debt Management Office Establishment Act, 2003. The borrowing plan seeks legislative approval for external financing to implement the 2025 Appropriation Act, refinance maturing Eurobonds, and expand Nigeria’s debt instruments to include Islamic finance products.

A Widening Fiscal Gap

Against this backdrop, concerns are growing that Nigeria is heading into a massive debt trap, especially as revenue – largely tied to oil – is not keeping up with the debt increase.

The DMO’s report comes amid concerns that the government’s 2025 budget—anchored on an oil benchmark of 2.06 million barrels per day and an exchange rate of N1,450 per dollar—is already under strain. Actual oil production has averaged below 1.5 million barrels per day, weakening revenue inflows.

Analysts say this combination of low oil revenue, high debt service, and a weakening naira could push Nigeria into deeper fiscal pressure, forcing further borrowing or monetary interventions by the CBN.

The DMO maintains that Nigeria’s borrowing strategy remains guided by sustainability principles, but with the debt stock now above N152 trillion, the challenge has shifted from access to finance to managing the burden without stifling growth.

Nigeria’s Central Bank Governor, Yemi Cardoso, has confirmed that the bank has officially adopted artificial intelligence (AI) in its monetary policy framework, particularly for macroeconomic forecasting and decision-making, marking a major step toward digital modernization of monetary governance in Africa’s fourth-largest economy.

Speaking at a fireside chat at the London Business School, moderated by Helene Rey, Lord Bagri Professor of Economics, Cardoso said AI has been fully integrated into the bank’s policy modeling process, describing the technology as an indispensable tool in an era driven by data and predictive analytics.

The governor’s comments mark the first public confirmation that the CBN has formally incorporated artificial intelligence into its policy processes, placing Nigeria among a growing list of central banks globally — including the Bank of England and the U.S. Federal Reserve — experimenting with AI for inflation modeling, exchange rate analysis, and liquidity forecasting.

Cardoso said the initiative is part of a broader effort to make policy “data-driven, transparent, and forward-looking,” as Nigeria continues to confront inflationary pressures and foreign exchange volatility.

On Cryptocurrency Regulation

Responding to a question on cryptocurrency, Cardoso acknowledged the asset class’s growing significance among young Nigerians, signaling a shift from the central bank’s previously restrictive stance.

He said the apex bank understands its importance to young Nigerians and will soon put out a statement in this direction, suggesting that a formal regulatory update is imminent.

The CBN had in 2021 restricted banks from facilitating crypto transactions, citing concerns about money laundering and capital flight. However, under Cardoso’s leadership, the tone has softened, particularly as global financial systems move toward regulated digital asset integration.

Interest Rates and Financial System Stability

On interest rates, Cardoso conceded that rates remain high, but expressed confidence that “as the situation develops, it will start to adjust itself.” He noted that the disappearance of arbitrage opportunities in the foreign exchange market would force Nigerian banks to shift focus toward real business generation and lending, rather than speculative gains.

Turning to the bank recapitalization drive, Cardoso reiterated that institutions unable to meet new capital requirements would have the option to downgrade their licenses or pursue mergers. He stressed that banks have been given sufficient time to comply and dismissed any notion of panic or deadline extension.

Bond Market and FX Reforms

Cardoso also addressed concerns over a perceived “takeover” of the bond market, clarifying that the CBN’s interventions are aimed at price discovery and market efficiency, not control.

He explained that there is no takeover of the bond market but price discovery, similar to FX market reforms, which makes the market function better. The reform, he explained, will get participants to operate transparently, according to their license category.

The governor added that electronic funding and other digital systems continue to play a central role in the ongoing reforms designed to enhance transparency and liquidity in Nigeria’s financial markets.

Reforms and Policy Focus

Cardoso was candid in his assessment of Nigeria’s economic challenges, saying that many of the current hardships stem from reforms that should have been implemented a decade ago.

He explained that things wouldn’t be this bad if reforms such as fuel subsidy removal and the floating of the FX market had been done earlier. He reaffirmed that the Central Bank’s primary mandate remains stability, not short-term economic growth.

Cardoso’s remarks at the London Business School mark a pivotal moment for Nigeria’s monetary policy direction. The adoption of AI for economic forecasting indicates a deliberate modernization of central banking operations — one that could improve the precision of inflation projections and exchange rate management.

At the same time, his openness to digital assets reflects a more pragmatic approach to cryptocurrency regulation, setting him apart from his predecessor and potentially setting the stage for Nigeria’s integration into global fintech trends.