The Central Bank of Nigeria (CBN) says it has recovered about N2 trillion from legacy intervention programmes after an internal audit uncovered a total intervention portfolio of N10.93 trillion and an outstanding balance of N4.69 trillion still unpaid.
Governor Olayemi Cardoso disclosed this in Abuja on Tuesday during ...-MPC briefing, saying the findings confirmed why the bank can no longer operate as a direct lender and has instead returned fully to orthodox monetary policy.
“We did a study of interventions and the total came to about N10.93 trillion,” Cardoso said. “Out of that, N4.69 trillion remains outstanding. Since we came, we’ve been able to rein back about N2 trillion. This is a humongous amount of money.”
He said the outstanding exposure has effectively blocked the CBN from launching new interventions because expanding such programmes now would risk destabilising the economy again.
According to him, years of intervention lending created serious distortions, weakened market discipline and encouraged an attitude where beneficiaries treated public funds as non-repayable.
“If you take money, it is money to be returned. It’s not money you take and walk away with,” he said.
Cardoso said one of the biggest problems with past interventions was that they displaced the private sector from their core responsibility in development finance. The CBN, he noted, lent at rates and conditions that made it impossible for commercial lenders and DFIs to compete, which in turn discouraged innovation in financial products.
“If others are doing it at the rates the Central Bank is doing it, why would anybody else think they can compete?” he asked. “Those are the dysfunctions we are correcting.”
He explained that the CBN’s new stance is to act as a catalyst rather than a replacement for the financial system, using its convening power to pull banks and development institutions into the sectors that need long-term capital.
“We had no choice,” he said. “All that amount of money is out, and it distorted the system. What we are doing now is bringing a new mindset into development finance.”
Cardoso said the success of the intervention clean-up is tied directly to the broader stabilisation drive underway in the economy. He noted that trust, transparency and consistent policy direction have been central to restoring credibility to the apex bank.
“We have become trusted and respected,” he said. “Confidence comes from transparency, policy consistency and openness.”
He added that the clean-up will continue until all legacy distortions have been fully unwound.
Earlier, the Monetary Policy Committee (MPC) voted to retain the Monetary Policy Rate at 27%, left the Cash Reserve Ratio unchanged at 45% for deposit money banks, 16% for merchant banks and 75% for non-TSA public sector deposits, and kept the liquidity ratio at 30%. The corridor was adjusted to +50/-450 basis points.
The MPC said the decision reflects the need to consolidate disinflation after headline inflation fell to 16.05% in October from 18.02% in September. Food inflation slid to 13.12% while core inflation eased to 18.69%.
The committee linked the decline to tight monetary policy, a more stable exchange rate, improved food supply and a surplus current account.
The committee linked the decline to tight monetary policy, a more stable exchange rate, improved food supply and a surplus current account.