May 14, (THEWILL)- The Central Bank of Nigeria (CBN) is set to undergo a major operational overhaul, aiming to transfer about N5.5 trillion in development finance activities to a combination of private banks and Development Finance Institutions (DFIs).
According to a new report on Nigeria, this move aligns with the recommendations from the International Monetary Fund (IMF) on the need for the country to streamline its economic policies and focus on core central banking functions.
Under the new strategy, the CBN will gradually phase out its direct involvement in development financing, which historically included lending on 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 and the CBN, as well as private financial institutions.
The IMF has been supportive of this shift, suggesting that it will help the CBN to focus more on its primary roles, including monetary stability and regulation. It also recommended that the concessionality of new lending should be limited to areas where market failures are evident.
The CBN is also working on recovering overdue loans from its development finance interventions. This is part of a broader effort to rein in inflation and manage credit growth effectively.
About the Author
Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.
