As a Nigerian child, statements like “I don’t pluck money from trees oo”, or “I don’t know where they print money oo” were often heard from the mouths of our Nigerian parents. Most times, they’d say this when we make an impossible financial demand on them or mismanage the funds we were given. The “ooo” at the end of each sentence added an air of Nigerianess and finality to the words they spoke. It should have left us clear on the subject matter(the issue of money), but oftentimes, it would leave us fantasizing about how we could grow money trees or print heaps of money to purchase sweets and biscuits. Now, the Nigerian Federal Government is living out our childhood fantasies, specifically, through the second fantasized method of getting money. The only difference is that they don’t spend it on sweets and biscuits.


“Printing money” is a derogatory term used by Nigerian citizens to best explain the concept of Ways and Means Advances, a loan facility provided by the Central Bank of Nigeria (CBN) to the Federal Government in the event of a budget deficit. Derogatory is the appropriate adjective to describe this term simply because of the scenes it creates in the mind of those who hear it. It leaves us imagining a scene of men in black suits with one government official wearing a native attire discussing in a room full of automatic printers, laughing loudly in an evil manner while discussing in hushed tones as the printer vomits huge piles of money. But no, the real event of “printing money” does not in any way look like the scene created.


Unfortunately, this term has become a norm in the Nigerian Economic dictionary as a result of the famous heart-wrenching debt owed by the Federal Government to foreigners and in-country mates. For clarity, Ways and Means is more appropriate and should be used instead of the term “printing money”. It’s best we understand this concept properly to see things the way they are and not as we assume them to be.



In plain language, Ways and Means refer to the government’s borrowing from the Central Bank. Since the apex bank is the government’s bank, the “borrowing” can be otherwise considered as an overdraft on the government’s account with its bank. When the government borrows, money is not printed as it is often thought to be. Rather, the Central Bank “creates money”, which is pumped into the economy through the government’s spending. A part of the money can be in the form of cash (printed) for specific purposes as requested by the government.


The above definition is a literal meaning of the subject matter. But constitutionally, what does “ways and means” convey?

According to the CBN 2007 Act Section 38, the Central Bank of Nigeria can temporarily supplement the government’s budget in the case of a shortfall in its revenue, but certain conditions were placed to ensure that it doesn’t go overboard. Straight out from the Act, the Section reads that;


“(1) …the Bank may grant temporary advances to the Federal Government in respect of temporary deficiency of budget revenue at such rate of interest as the Bank may determine.

(2) The total amount of such advances outstanding shall not at any time exceed five percent of the previous year’s actual revenue of the Federal Government.

(3) All Advances made pursuant to this section shall be repaid –

(a) as soon as possible and shall in any event be repayable by the end of the Federal Government’s financial year in which they are granted and if such advances remain unpaid at the end of the year, the power of the Bank to grant such further advances in any subsequent years shall not be exercisable, unless the outstanding advances have been repaid;and

(b) in such form as the Bank may determine provided that no repayment shall take the form of a promissory note or such other promise to pay at a future date or securitisation by way of issuance of treasury bills, bonds, certificates, or other forms of security, which is required to be underwritten by the Bank.”


Clearly, ways and means advances are not an unconstitutional means to lend to the government when needed. To a layman’s understanding, the constitution has provided for “printing money”. However, the bad twist to this good plot provided by the CBN’s Act is the Federal Government’s reliance on the loan facility and the hindrance created to the CBN’s autonomy. The constitution made strict limitations to this loan facility, spelling bluntly that it is a “temporary advance..”, and that “the total amount of such advances outstanding shall not at any time exceed five percent of the previous year’s actual revenue of the Federal Government.” Currently, the ‘total amount of such advances’ accumulated,  stands at 23 trillion naira. For context, the figure is larger than this year’s budget. Apparently, the Federal Government has made itself an unwelcome self-entitled guest when it’s meant to be an occasional temporary visitor.



For the record, borrowing from Central Banks is a common occurrence. One of the functions of any central bank in the world is to act as a “lender of last resort”. This means, commercial banks or the government can go to the Central Bank to borrow money when they have exhausted all other options of getting the necessary funds needed to stay afloat or supplement a budget deficit. Several countries and their central banks engaged in this transfer in the year 2020 when the whole world was shaken, economically and otherwise, as a result of the COVID-19 pandemic. Moreover, a 2012 IMF working paper titled “Central Bank Credit to the Government: What Can We Learn from International Practices?” gives details of the part of the constitutions in a few sample countries that legalize the transfer from the Central Bank to their respective governments. But the one problem with this allowance is the eventual possibility of the Federal Governments overstretching the limitations.


So in essence, Nigeria is not the only one with this problem. Our dear friend and neighbor, Ghana currently owes its Central Bank 40 billion cedis ($3.3 billion), as reported by Bloomberg, and intends to convert all of it into bonds in the nearest future. Down here in Nigeria, there has been a recent uproar about the norm of borrowing from CBN unconstitutionally. Shockingly, on the 28th of December, Buhari attempted to seek a delayed approval for the loan that has already been spent, causing an uproar from the Senate. This event does not tell a story different from the growing reckless borrowing by the government and the Central Bank’s mindless indulgence as shown in the chart below.


Given the unconstrained borrowing by the government from not just its Central Bank, but from foreign and domestic lenders, Is it safe to say that Nigeria’s government can no longer function properly without borrowing? It leaves a call to dig deeper to identify and understand what the true problem is. But maybe not so much digging. Most Nigerians can pinpoint where we get it wrong financially. From the under-utilization of available resources to the low oil production levels, the reckless spending of funds, corruption, and misplacement of priorities, it is clearly known that Nigeria has a problem with both making money and spending money.

It’s quite pathetic of a country to continuously beg only to lavishly spend its borrowed funds in ways that cannot be accounted for. Surely, the rising inflation levels and damage done to the economy is enough proof of the unruly actions of the government. Sincerely, this act of continuous borrowing from the Central Bank is a pure violation of the law which is subject to punishment (that might not eventually happen).


As the government makes plans to convert these loans to bonds with a maturity period of 40 years, it is quite obvious that it is not a strong remedy to borrowing. Good management practices, increased capacity to produce, and following through with the right fiscal policies among other well-meaning actions will lead to a permanent end to this abuse of the Ways and Means Advances.


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