Presidential Candidate of the Labour Party (LP) in the 2023 general elections, Peter Obi, on Monday criticised President Bola Tinubu over his recent securitisation of the N7.3 trillion ‘ways and means’ facility from the Central Bank of Nigeria (CBN), describing it as illegal.
This is even as the former Anambra State governor lamented that the National Assembly approved the request without asking questions noting that the continuous securitisation of ways and means borrowing from the CBN is against the law and against the CBN act which stipulates the limit of the federal government’s borrowing from the CBN not to exceed 5 percent of the previous year’s revenue.
Securitisation of a loan means converting the debt to an asset that can later be offered to investors in the form of bonds. If a loan is securitized, it is pooled with other similar loans and sold by the original lender, in this case (CBN) to other investors. So, CBN having securitised the loan can later decide to offer the loan as bond to investors to invest in, that way, CBN recoup its money.
Speaking further on the issue, Obi recalled that barely 26 days to the end of its eight-year tenure, the Buhari administration got the Senate to approve a N22.7 trillion ways and means borrowing from the CBN.
He lamented that in seven years, CBN lending to the Buhari government had climbed 2700 per cent in flagrant violation of the CBN Act.
He stated that the National Assembly still approved the new Tinubu administration’s request for a N7.3 trillion securitisation of the existing ways and means facility just before considering the 2024 budget proposals in flagrant indifference to the illegality of the excessive ways and means borrowing.
More surprisingly, Obi stated that on December 30, 2023, the last working day of the year 2023, Tinubu requested the National Assembly to approve the securitisation of the N7.3 trillion being the outstanding debt owed to the CBN.
Almost at the same time as the “illegal” securitisation was approved by parliament, the president, Obi said, also sought and secured National Assembly approval to borrow another $7.8 billion and €100 million.
“No questions asked. No explanations were sought as to the precise purpose of these borrowings all within the seven-month tenure of this government.
“Ordinarily, minimum public accountability should require that the president and his administration offer more specific explanations about the purpose of these borrowings. But so far, all we have been told is that these borrowings are meant to fund ‘capital’ expenditure.
“Specifically, the continuous securitisation of ways and means borrowing from the CBN is against the law and against the CBN act which stipulates the limit of the federal government’s borrowing from the CBN not to exceed 5 per cent of the previous year’s revenue. The law also requires the liquidation of the outstanding borrowing before any new advancement can be made,” he stated.
The businessman cum politician said the CBN Act expressly states that all borrowings under ways and means cannot be converted to debt or securitised if the CBN is the underwriter.