Ripples as CBN fails to publish annual reports

The Central Bank of Nigeria (CBN) has failed to publish its annual accounts, a decision analysts said is a breach of the transparency requirements outlined in the CBN Act.

Under Section 50(1), the CBN Act requires the apex bank to submit its audited annual accounts to the National Assembly and the president within two months of the fiscal year’s close.

“The Bank shall, within two months after the close of each financial year, transmit to the National Assembly and the President a copy of its annual accounts certified by the Auditor,” the Act reads.

Moreover, Section 50(3) stipulates that these accounts must be published in the government gazette “as soon as possible.”

“The Board shall ensure that accounts submitted pursuant to this section shall as soon as possible be published in the Gazette,” the Act reads.

Despite these legal provisions, the CBN continues to delay publishing its annual reports, leaving investors, economists, and the public in the dark.

Between 2015 and 2023, the CBN refused to publish its financial statements, which include the bank’s balance sheet and income statement, independently audited by a third-party firm.

However, in August 2023, the CBN released consolidated financial statements covering seven years (2016–2022).

This disclosure came amidst growing public outcry over the bank’s controversial lending practices, particularly its extensive funding of government deficits.

The central bank’s lending to the Nigerian government through short-term overdrafts, known as the Ways and Means facility, had surged exponentially.

Between 2015, when former President Muhammadu Buhari assumed office, and the end of 2022, this lending ballooned 30 times, reaching a staggering N23.2 trillion.

Despite this, the bank may be reverting to its old ways. With 2024 nearing its close, the CBN has yet to publish its financial statement for 2023, raising concerns about a return to its previous pattern of opacity.

This delay comes at a time of increasing economic uncertainty.

Economists and finance analysts argue that without the timely publication of key reports, confidence in the institution’s ability to manage monetary policy is significantly undermined, rendering the financial system opaque.

The National Bureau of Statistics (NBS) recently reported that the country’s annual inflation rate eased to 33.88 per cent in October, marking the first decline after nearly two years of relentless increases. Despite this marginal improvement, the naira continues to face severe pressure in foreign exchange markets.

Meanwhile, the CBN Governor, Olayemi Cardoso, announced in early November that Nigeria’s foreign exchange reserves had surpassed $40 billion, reaching its highest level in 33 months.

While this development offers a glimmer of hope, analysts insist that a lack of operational transparency and accountability threatens the broader financial stability of Africa’s largest economy.

Implications

Aliyu Ilias, an economist, expressed concerns about the CBN not fulfilling its statutory obligation to present audited accounts, as required by law.

“Statutorily, the CBN is supposed to present their audited accounts as stipulated by the law. Anything against that is a breach of the constitution of Nigeria,” he said.

He acknowledged the CBN’s autonomy, which means it cannot be forced into action quickly, but he stresses that this autonomy does not exempt it from its legal duties.

He highlighted the lack of accountability from both the National Assembly and the Presidency, neither of which is pressuring the CBN to comply with this requirement.

Mr Ilias argued that this neglect contributes to systemic governance issues in Nigeria, where ignoring key responsibilities accumulates problems until they become difficult to resolve.

“By the time we keep overlooking what we are supposed to be interested in, a lot of things will pile up, and it will be too late to correct them. That’s exactly what happened during Emefiele,” Mr Ilias said.

Another analyst, Kelvin Emmanuel, highlighted the Central Bank of Nigeria’s (CBN) legal obligation under the CBN Act of 2007 to publish its annual financial statements.

He said the failure to disclose the 2023 financial reports six months after the end of the fiscal year raises concerns, particularly among foreign investors, adding that these financial disclosures are critical because they provide transparency about the CBN’s financial health.

Specifically, he said, the reports reveal the net asset ratio with external asset managers and the status of reconciliations on financial instruments like forwards and bank swaps. Without this transparency, investors are left uncertain about Nigeria’s ability to provide liquidity for capital and dividend remittances.

According to him, this lack of clarity discourages foreign investment, as investors perceive an inability to exit when needed. Even though Nigeria’s issuer default rating has improved, the absence of accessible financial data undermines efforts to attract long-term, stable investment.

“The fact that 6 months after the close of their books for 2023, the books are yet to be disclosed sends a negative signal to the international community, especially as it regards the state of its net to gross external reserves. This is important because it exposes the net asset ratio of the CBN with external asset managers and the state of reconciliation on forwards and swaps with local and international banks,” he said.

Paul Alaje, the chief economist and partner at SPM Professionals, also emphasised the critical role of the CBN annual report in shaping economic policy and transparency.

He noted that the report’s significance is that it is a foundational document for government institutions to make informed decisions and projections.

“The parameters, the data released by the central bank, is what many other institutions of government make use of. So when the report is not coming, it is therefore very, very difficult for citizens to make necessary projections and to also know what exactly [is happening]. It also rates the health of the economy,” Mr Alaje said.

He added that the CBN’s annual report offers a monetary perspective on the economy that goes beyond headline inflation and unemployment figures. Its absence, he argued, creates serious challenges domestically and internationally, particularly in enhancing Nigeria’s economic transparency.

“It affects our rating, of course, because it [the report] enhances our transparency. But if it is not done, then it affects our rating very, very clearly,” he said.

A turbulent political backdrop further exacerbates the transparency issue. Under former CBN Governor Godwin Emefiele, the bank faced widespread criticism for its controversial monetary policies, including the extensive use of the Ways and Means facility to finance government budget deficits.

His tenure also drew scrutiny for blurring the lines between the CBN’s independence and partisan politics, particularly after the former CBN boss’ failed presidential bid.

Mr Emefiele’s actions raised questions about the central bank’s autonomy and whether withholding financial reports forms part of a broader strategy to obscure questionable fiscal activities.

These concerns have taken on greater significance as the former governor faces prosecution by the Economic and Financial Crimes Commission (EFCC) at the High Court of the Federal Capital Territory in Abuja.

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The EFCC had accused him of obtaining $6.2 million under false pretences, alleging he misrepresented a letter from the Secretary to the Government of the Federation.

The letter, dated 26 January 2023, purportedly requested a contingent logistics advance from the CBN based on a presidential directive—a claim investigators say he knowingly falsified.

Efforts to reach the CBN’s spokesperson, Hakama Ali, were futile. When contacted for a response regarding the institution’s failure to publish its annual accounts, she did not respond to calls and a text message.