The Central Bank of Nigeria, CBN, will transfer N5.5 trillion for development activities to the Ministry of Finance, Development Finance Institutions (DFIs) amid its restructuring plan.
According to a new report, this move aligns with the recommendations from the International Monetary Fund, IMF, on the need for the CBN to streamline its economic policies and focus on core central banking functions.
“The CBN’s decision to phase out its development finance activities is welcome. These activities (5.5 trillion naira) will be transferred to development finance institutions, owned jointly by the Ministry of Finance Incorporation, MOF and CBN, and private financial institutions.
“An orderly portfolio transfer is key to avoiding interruption of credit flows to agriculture and small and medium enterprises. Undercapitalized financial institutions should not be eligible to absorb CBN’s portfolio”, the report read.
Under the new strategy, the CBN will gradually phase out its direct involvement in development financing, which historically included lending concessional terms to sectors like agriculture and small and medium-sized enterprises (SMEs).
These activities will now be handled by DFIs, jointly owned by the Ministry of Finance (MoF), the CBN, and private financial institutions.
After Olayemi Cardoso emerged as CBN governor, he reiterated that the apex bank would limit itself to its primary function.
