In 2024, the Central Bank of Nigeria (CBN) saw a dramatic 99.8% decline in interest income from the Federal Government's overdraft facility, known as the Ways and Means advances. The bank earned only N3.1 billion from the facility, down from N1.6 trillion in 2023.

This steep drop in earnings signals a significant shift in fiscal and monetary policy, as the CBN has worked to reduce the government's dependency on the overdraft facility. The interest income, categorized under "loans and receivables," is linked to the controversial Ways and Means facility, which the CBN provides to the government to cover short-term budgetary shortfalls. The interest rate on the facility is based on the Monetary Policy Rate (MPR), with an additional three percentage points.

The reduction in interest income follows the government’s move in 2023 to restructure its outstanding debt by converting N22.7 trillion of overdrafts into 40-year bonds with a three-year moratorium. This restructuring was intended to ease inflationary pressures and strengthen the CBN’s balance sheet.

In June 2024, the Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, announced that the government had repaid N7.3 trillion of the securitized debt. He also revealed that the government had stopped using the CBN overdraft for debt servicing, opting instead for a more transparent and accountable spending framework.

Further highlighting the shift, CBN Governor Mr. Olayemi Cardoso confirmed that no new overdrafts would be granted to the Federal Government until all outstanding balances from the Ways and Means facility were fully cleared.

The Ways and Means facility has long faced criticism for undermining Nigeria’s monetary policy and contributing to inflation. Originally meant to address temporary fiscal gaps, its prolonged use has raised concerns about fiscal discipline. The controversy intensified in 2023 when former CBN Governor, Godwin Emefiele, was accused of printing N22.7 trillion for the government without the National Assembly’s approval, sparking debates about transparency and financial accountability.

The sharp decline in interest income marks a major shift in Nigeria’s fiscal and monetary policies, as the government works to reduce its reliance on the controversial Ways and Means facility.