A federal high court in Abuja has dismissed a suit seeking to restrain the federal government from securitising the N22.7 trillion Ways and Means loan received from the Central Bank of Nigeria (CBN).
Securitisation is the practice of pooling together various debt instruments and selling them as bonds to investors.
In a judgment delivered on Thursday, James Omotosho, the presiding judge, held that the plaintiffs lacked locus standi (legal right) to institute the case, noting that they failed to prove the case.
The suit, marked FHC/ABJ/CS/1286/2023, was filed by Justin Edim and Akinfewa Akinwunmi against President Bola Tinubu, the federal government of Nigeria, CBN, and the ministry of finance as first to fourth defendants.
Others in the suit are the debt management office (DMO), national assembly, and attorney-general of the federation (AGF) as fifth to seventh defendants, respectively.
The plaintiffs, through their counsel, Victor Opatola, claimed they initiated the legal action on behalf of themselves and other Nigerian citizens.
They asked the court to stop the conversion of the debt to a promissory note or any other promise to pay at a future date or securitisation through the issuance of treasury bills, bonds, or other forms of security.
In December 2022, the federal government requested the 9th national assembly for permission to securitise the debts it incurred from the CBN over the years.
The plaintiffs claimed that the series of loans secured by the government from the CBN had amounted to N23.7 trillion.
They added that the federal government was planning to restructure the loans to something that could be traded.
They further stated that the federal government had over the years secured various loans from the CBN under the Ways and Means provision of section 38 of the CBN Act in contravention of relevant laws.
They argued that the laws stipulate that the total amount the government could borrow shall not exceed five percent of the previous year’s revenue.
Recently, according to the plaintiffs, the Ways and Means debt of N22.7 trillion was decided to be converted into bonds (promissory note) contrary to section 38(3)(b) of the CBN Act.
The plaintiffs wanted the court to declare that the effect of securitising the ways and means debt would adversely affect millions of Nigerians, as well as rob them of the true worth of their savings and further drive Nigerians below the poverty line.
Delivering the judgment, Omotosho struck out the name of the national assembly from the suit, noting that the plaintiffs had breached the condition precedence of filing a pre-action notice on the legislature three months before filing the case.
The judge said though the plaintiffs claimed they filed the matter on behalf of the masses, the instant case was not a fundamental enforcement rights suit.
He said the claim that the suit was brought on behalf of the public was incomprehensible.
The judge added that the plaintiffs failed to show how the actions of the defendants affected them personally.
[TheCable]