An aide of former President Mohammed Buhari has refuted the claim of the Governor of the Central Bank of Nigeria, Yemi Cardoso, who blamed the current economic hardship in the country on the poor handling of the nation’s economy between 2015 and 2023 when Buhari served two terms.
The aide said the money supplied by the CBN during the review period was N7.5tn, far less than the N35tn Cardoso stated.
This came as the latest data from the CBN showed that the total money supply in the Nigerian economy increased by 14.22 per cent to N107.1tn between January and August 2024. The country’s money supply was N93.77tn in January 2024.
At a recent media briefing to disclose the decisions of the September edition of the Monetary Policy Committee meeting of the apex bank in Abuja, Cardoso said, “In 2015, the money supply was about N19tn. And in 2023, it was N54tn. That’s a huge increase, a very, very huge increase, and a substantial amount of that was through Ways and Means.”
According to him, the printing of N35tn led to a huge amount of money in circulation, translating to too much money chasing the same amount of goods.
Cardoso’s remarks referred to the large-scale issuance of money through ‘Ways and Means,’ a process where the CBN lends money to the government.
This approach, not backed by equivalent economic output or productivity, flooded the economy with excess naira, reducing its value, he argued.
But Buhari’s aide, who spoke on the condition of anonymity due to lack of authorisation to comment on the matter, argued that the figures were inaccurate.
The senior aide said the aggregate total of the Ways and Means advances on the Consolidated Revenue Fund was N7.5tn in the eight years Buhari served.
“I have read the story and my thinking is that Nigerians will just be laughing at them. The real position of things is that from the beginning, when the then-acting Governor of the Central Bank of Nigeria (was in office), that issue arose from that moment.
“The CBN was called by the National Assembly, what were their numbers? And the numbers for Buhari were not more than N7.5tn for all eight years.
“The Cable newspaper did a report challenging the National Assembly that they had promised to release a report. They (NASS) said they were going to release a report. The last time we heard that, they said they would release it in September. There are numbers, as given authoritatively by the central bank,” he stated.
The aide backed his argument with a letter that he claimed was the response of the CBN to a request by the Senate on the matter at the time.
The letter, dated January 16, 2023, and titled, ‘Re: The Senate Special Committee on Ways and Means,’ was addressed to the office of the Senate Majority Leader.
It read in part, “All letters received by the CBN for processing of the advances are provided in Appendix 1 & 2. However, kindly note that the figure of -22,719,7033,774,306.90 is the balance of the Treasury Sub-Treasury Account as of December 19, 2022. This account is the account mandated for granting overdraft facilities to the Federal Government account.
“We have also attached a summary page that details the Ways and Means granted between 2015 and 2022 as Appendix 3.”
Buhari’s administration, from 2015 to 2023, faced significant fiscal challenges, including falling oil prices and reduced oil revenues.
To manage deficits, the government increasingly relied on the central bank to finance its spending, printing trillions of naira.
This monetary expansion, according to both Cardoso and Finance Minister Wale Edun, was not matched by productivity, leading to runaway inflation and a weakened currency, which made everyday goods and services less affordable for Nigerians.
Several efforts to get the CBN and presidency officials to react to the claims made by the former ex-President’s aide were not successful, as they had yet to respond to enquiries up till when this report was filed on Saturday night.
Money supply rises
Meanwhile, the total money supply in the Nigerian economy has increased by 14.22 per cent to N107.1tn between January and August 2024, according to the latest figures from the CBN. The country’s money supply was N93.77tn in January 2024.
The CBN also stated that there was a 0.75 per cent month-on-month increase from N106.3tn in July and a 5.6 per cent rise from N101.4tn in June.
Year on year, it was an increase of 65 per cent from N64.8tn recorded in August 2023.
Money supply is the total of all of the currency and other liquid assets in a country’s economy on the date measured. It includes all cash in circulation and all bank deposits that the account holder can easily convert to cash.
The money supply M2, consisting of currency outside banks, narrow money, demand deposits, and quasi-money, is indicative of the growing liquidity in the Nigerian economy.
Hence, this sharp rise in liquidity continues to pose challenges for the CBN’s Monetary Policy Committee as it grapples with balancing economic growth and controlling inflation.
A breakdown showed that currency outside banks stood at N3.8tn, while demand deposits reached N31tn, and quasi-money surged to N72.2tn in August 2024.
At the last MPC meeting, Cardoso blamed the high money supply in the economy as part of the reasons for the high inflation rate in the country.
Checks by our correspondent to confirm this figure using the money supply data on the CBN website showed that the total money supply moved from N18.9tn in January 2015 to N20.03tn in December 2015.
By 2023, the figure increased from N52.83tn in January 2023 to N78.83tn as of December 2023.
Increased liquidity in the system can stimulate short-term economic growth by making credit more accessible to businesses for expansion and investment. This can, in turn, boost production, job creation, and overall economic activity.
However, the downside is that too much money circulating in the economy can fuel inflation, especially if production does not keep pace with the rising demand for goods and services.
