Nigeria’s Central Bank grew its balance sheet by 30 percent between 2012 and 2014 as its intervention in various sectors of the economy led to a surge in loans and receivables.
The CBNs balance sheet increased to N13.7 trillion from N10.53 trillion, according to data from its financial statement for 2014 released on Friday.
The CBNs loans and receivables increased by 42 percent to N5 trillion from N3.59 trillion at the beginning of 2012.
The Central Bank’s holdings classified as other assets, rose to N1.29 trillion, from N111 billion in 2012.
The bank defines other assets as claims held against other entities for the future receipt of money.
The Apex bank carries out intervention activities by providing below market interest rate loans to financial institutions in pursuit of its objective of ensuring financial system stability.
The banks loans and receivables comprise overdraft balances and short term advances, staff loans, loans to Deposit Money Banks on Commercial Agricultural Credit Scheme, and advances to the Federal Mortgage Bank of Nigeria.
Others include long term loans, Bank of Industry Debenture and 6 percent Perpetual Debentures in Nigerian Export Import Bank, Asset Management Corporation of Nigeria (AMCON) note, Nigerian treasury bonds, as well as trade and other receivables.
The CBN’s total assets as a percentage of Nigerian GDP are equivalent to 14.8 percent.
The net income for the year was N33.893 billion for the group, while the bank did not make any payments to the Federal Government’s treasury last year.
“In line with the provisions of the Fiscal Responsibility Act 2011, 20 percent of the net income of the bank (exclusive of unrealised gain) will be credited to retained earnings, while the balance will be paid to the Federal Government of Nigeria. After considering the effects of the unrealised gains…no payments will be made to the Federal Government in the financial year,” the CBN said in the report.
The bank’s external reserves rose marginally to N5.83 trillion from N5.42 trillion in 2012.
The CBN in developing countries often take on the role of development institutions. The Nigerian Central Bank has intervened in the Power, Aviation, and Agriculture sectors of the economy by setting up intervention funds with the aim of extending loans at low interest rates.
Businesses in Nigeria are often starved for credit.
“Formal businesses in Nigeria receive only 1 percent of the funds they need for expansion from bank loans, the rest is obtained from retained earnings, suppliers credit or borrowing from family and friends,” the World Bank said in a 2011 report.
The average branch of major Nigerian banks costs about $1 million per annum, one of the highest in Africa, leading to banks charging highinterest rates (24 percent and above) in a bid to break even.
Some major intervention funds made available by the FG and CBN to increase access to credit for private sector businesses include the N200 billion Small and Medium Enterprises Credit Guarantee Schemes (SMECGS) which was launched in April 2010.
The N200 billion Restructuring and Refinancing Facility (REF) scheme, approved by the CBN in 2010, aimed at fast-tracking the development of the manufacturing sector of the Nigerian economy.
The Nigerian Incentive Based Risk Sharing System for Agricultural Lending (NIRSAL) was launched in 2011 with a view to providing farmers with affordable financial products and reducing the risks of such loans to the benefitting farmers.
There is also the Power and Airline Intervention Fund (PAIF), introduced in September 2010.
PATRICK ATUANYA
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