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The short answer
Ways and Means advances are short-term loans the CBN makes to the Federal Government to cover temporary gaps between spending and revenue. Under the CBN Act they are capped at 5% of the previous year's actual collected revenue and must be repaid by the end of the year granted. When the cap was breached for years, the Senate approved converting ₦22.7 trillion (May 2023) and ₦7.3 trillion (December 2023) of advances into longer-term securities.
The overdraft idea
The CBN is banker to the Federal Government. Revenue arrives unevenly, while salaries and debt service fall due on fixed dates, so the law lets the CBN bridge short gaps. That bridge is Ways and Means: an overdraft, not a source of permanent funding. Section 38 of the CBN Act 2007 governs it.
The legal limit
Guidelines the CBN released on 17 September 2024, as reported by the ICIR, keep the rule unchanged:
- Advances are capped at "a maximum of 5.0 per cent of the previous year's actual collected revenue".
- They "shall be liquidated as soon as possible and shall in any event be repayable at the end of the year in which it was granted".
- Under the Treasury Single Account, the advance is set after recognising MDA sub-accounts linked to the Consolidated Revenue Fund.
The National Assembly passed a bill on 31 July 2024 to raise the cap to 10%; the CBN said in its guidelines that it would keep the 5% limit.
Worked example of the cap
Example only. If the Federal Government's actual collected revenue in the previous year were ₦10 trillion, the most the CBN could advance in the current year would be ₦500 billion (₦10 trillion × 0.05), and that amount should be cleared by 31 December. At a 10% cap the ceiling would double to ₦1 trillion.
Securitisation: turning overdraft into long-term debt
For several years, advances ran above the 5% limit and were not cleared by year-end. To regularise them, the outstanding balances were converted into long-dated government securities held by the CBN. The ICIR reports two Senate approvals:
| When | Amount securitised | Requested by |
|---|---|---|
| May 2023 | ₦22.7 trillion | Buhari administration |
| December 2023 | ₦7.3 trillion | Tinubu administration |
Together that is ₦30 trillion. Securitisation does not wipe out the debt; it turns an overdraft into a bond the government services over many years. CBN Governor Olayemi Cardoso has said the CBN would not again be part of Ways and Means arrangements if outstanding debts were not refunded.
Why it matters for inflation
- When the CBN lends to government, it credits government accounts with new naira, which is spent into the economy. That adds to money supply without matching new goods. Credit to government sits inside net domestic credit, which Nairametrics, citing CBN data, put at ₦101.07 trillion in July 2026.
- Large, persistent advances are a form of money printing and work against the MPC's efforts to slow inflation; the ICIR notes earlier reports that over-lending to government added to inflationary pressure.
- Holding to the 5% cap leaves the CBN free to tighten without being undercut by its own lending to the Treasury. See monetary vs fiscal policy.
- For how inflation hits household budgets, see inflation and your budget.
What to watch from here
Three things tell you whether Ways and Means is under control. First, whether new advances stay within 5% of the previous year's revenue and are cleared by December, which the CBN's guidelines require. Second, whether any new securitisation request goes to the National Assembly, which would signal that advances have again run beyond the limit. Third, whether the 10% amendment passed by the National Assembly in 2024 changes the CBN's stated position. Reports of each tend to appear in budget debates and in the CBN's own statements after MPC meetings.
Questions people ask
What is Ways and Means in Nigeria?
A short-term overdraft from the CBN to the Federal Government, meant to cover temporary shortfalls and be repaid within the year.
What is the Ways and Means limit under the CBN Act?
5% of the previous year's actual collected revenue, repayable by the end of the year granted. The CBN said in September 2024 it would keep this limit.
How much Ways and Means was securitised?
The Senate approved ₦22.7 trillion in May 2023 and ₦7.3 trillion in December 2023, as reported by the ICIR.
Does Ways and Means cause inflation?
Large advances add new naira to the economy without new output, which can push prices up. That is why the legal cap exists.
Sources
- ICIR: Borrowings to FG through ways and means remain at 5% - CBN (18 Sep 2024) · accessed Oct 2026
- Nairametrics: Nigeria's money supply hits N138.78 trillion in July (1 Sep 2026) · accessed Oct 2026
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