Ndubuisi Ekekwe, a Nigerian professor based in the United States, has clarified that the Central Bank of Nigeria is not bankrupt but has just engaged in reckless spending, as fresh documents indicate how the CBN’s liabilities have escalated.
Last week, social media went frenzy as the CBN released its financial statements which revealed how the apex bank borrowed $13.8 Billion from U.S Banks (JP Morgan & Goldman Sachs) and used Nigeria’s Foreign Reserve as Collateral.
Part of the audit, which covered the period from 2015 to 2022, also revealed disturbing facts about how President Muhammadu Buhari’s past administration printed money to the tune of N32 trillion through the Ways and Means policy.
In response, many Nigerians from different quarters have speculated that Apex Bank’s irresponsible spending may have caused it into bankrupt.
But Mr Ekekwe in a post via his X account formerly known as Twitter on Monday added that while the CBN financial statements indicated that the bank’s pace of growth in liabilities was not sensible, it does not necessarily link to a state of bankruptcy, according to accounting standards with Intermediate level of (ICAN).
“I think Nigeria needs to find a solution to the level of misinformation we have online these days. I have been inundated with many questions on if the Central Bank of Nigeria (CBN) is bankrupt or going bankrupt. Please there is nothing like that. The Total Assets of CBN (Group) stand at ~N57.99 trillion while Total Liabilities are ~N56.34 trillion, giving a decent Total Equity of ~N1.604 trillion, as at Dec 31 2022. By accounting standard (at least to Intermediate Level of ICAN), this is not a state of bankruptcy.
“That said, the rate of growth in the Liabilities was not prudent, and Nigeria has to cut that down. Instead of bankruptcy, the bank actually recorded a profit of N65.63 billion in 2022; in 2021, it was N31.04 billion. Relatively, that is nothing, but that is not a sign towards bankruptcy,” Mr Ekekwe said.
He said while it is understandable that many Nigerians were outraged by the bank’s audited accounts, the observation was not on the bank’s financial status, but rather on the lack of transparency in its management.
He further stated that if any Nigerian bank did what CBN did and “covered it,” that bank would be in problems with the apex bank.
He noted that the apex bank is “strong” but ought to be stronger.
“Understand that most people are very unhappy, including myself, not because of any sign of bankruptcy, the issue was borrowing $$billions from US banks, and securing/collateralizing the loans with the national foreign reserves or other asset classes, without informing the Nigerian people and the National Assembly.
“That non-disclosure blew many models wide, since the funds you think are there have already been spent, via backdoor. I wrote that I was disappointed that Buhari allowed such to happen under his watch.
“But that observation was not on the financial position of the bank, rather, the lack of transparency in its management. CBN did what if any Nigerian bank had done and “covered it”, that bank would be in trouble with the apex bank.