- Interventions: Senate Moves to Check CBN’s ‘Reckless’ Spending
The Senate has condemned the Central Bank of Nigeria for spending a total of N1.223tn in 2016 on interventions without appropriation by the National Assembly.
The upper chamber of the National Assembly is now considering subjecting the apex bank’s expenditure on interventions to legislative approval.
This is the focus of a bill seeking to amend the CBN Act, 2007 “to ensure transparency and accountability in the operations of the bank and subject intervention advances to the approval of the National Assembly,” which passed the second reading at the plenary on Wednesday.
Senator Rose Oko, who sponsored the bill, said the amendment was to bring the CBN Act in line with the provisions of Section 80 of the 1999 Constitution and Sections 22 and 23 of the Fiscal Responsibility Act.
Oko noted that the apex bank was empowered and mandated by Section 38 of the CBN Act to intervene in the nation’s budget to meet shortfalls to the tune of five per cent of the actual revenue of the previous year.
“However, the Central Bank of Nigeria has continually acted in contravention of the provisions of the Constitution and the Fiscal Responsibility Act through extra-budgetary interventions to selected bodies, institutions and agencies,” she added.
The lawmaker stated that while the interventions were expected to have economic benefits, notably to strengthen the economy through the stabilisation process, income distribution, resource allocation, sectorial performance and job creation, “its procedural problems and its lack of appropriation and oversight exposes it to abuse, ineffective implementation and imprudence in its implementation.”
She added, “The CBN neither seeks nor obtains the approval of the National Assembly on the intervention funds as they are not captured in the Appropriation Act. There are, therefore, no known mechanisms for monitoring and tracking of the funds.
“Consequently, effective legislative oversight of such funds is not in existence. This situation gives room for abuse, financial recklessness and financial imprudence, resulting in the lofty aims of the intervention remaining unrealised to a large extent.”
Oko cited some of such interventions by the CBN as the N620bn bailout to five banks, namely Afribank Plc, Intercontinental Bank Plc, Union Bank of Nigeria Plc, Oceanic Bank Plc and Finbank Plc.
She also mentioned the “various donations to tertiary institutions running into several billions,” the N300bn bailout to states, drawn from the $2.1bn NLNG taxes and dividends, to pay salaries, as well as the N2.02tn said to have been set aside by the apex bank to fund various sectors of the economy.
The sectors were listed as the Commercial Agricultural Credit Scheme (N200bn); Power and Aviation Intervention Funds (N300bn); the Micro, Small and Medium Enterprises Development Fund (N220bn); Real Sector Support Facility (N300bn); and the Nigeria Electricity Market Stabilisation Facility (N213bn), totalling N1.223tn.
Oko said, “The total capital budget for 2016 was N1.8tn. If N1.223tn was indeed disbursed or intended as intervention, then, an amount almost the size of the capital budget was disbursed without appropriation and tracking to know the effectiveness of the intervention in the economy.”