The Chief Executive Officers and top management staff of banks may also be probed during the ongoing investigation of the activities of the Central Bank of Nigeria.
It was learnt that some bank CEOs would be invited in an
effort to ascertain any discrepancies around the management of intervention
funds by deposit money banks.
In a recent report, the Central Bank of Nigeria may be asked
to withdraw its audited annual financial reports, which were recently released.
This came after a team investigating the apex bank
discovered discrepancies and irregularities in the financial accounts.
In August, the CBN released its financial accounts for the
years 2016 to 2022 amid an ongoing probe of the financial services sector
regulator by a Special Investigator appointed by President Bola Tinubu.
Tinubu had on July 28 appointed a former Chief Executive
Officer of the Financial Reporting Council of Nigeria, Jim Obazee, as Special
Investigator to probe the activities of the apex bank under its suspended
governor, Godwin Emefiele.
Aside from the CBN, the special investigator is also
investigating the Nigerian National Petroleum Corporation Limited, FRC, and
other Government Business Entities.
The President, in the letter which he personally signed,
said the move was in continuation of the government’s anti-corruption fight.
The letter, dated July 28, 2023, read, “In accordance with
the fundamental objectives set forth in Section 15(5) of the Constitution of
the Federal Republic of Nigeria 1999 (as amended), this administration is,
today, continuing the fight against corruption by appointing you as a Special
Investigator, to investigate the CBN and Related Entities. This appointment
shall be with immediate effect and you are to report directly to my office.
“The full terms of your engagement as Special Investigator
shall be communicated to you in due course but require that you immediately
take steps to ensure the strengthening and probity of key Government Business
Entities, further block leakages in CBN and related GBEs and provide a
comprehensive report on public wealth currently in the hands of corrupt
individuals and establishments (whether private or public).
“You are to investigate the CBN and related entities using a
suitably experienced, competent and capable team and work with relevant
security and anti-corruption agencies to deliver on this assignment. I shall
expect a weekly briefing on the progress being made.”
The President also attached a copy of his directive
suspending Godwin Emefiele as Governor of the CBN on June 9, 2023.
The CBN Special
Investigator is working with a team of accountants, auditors, and forensic
accountants to carry out the investigation, according to finding.
The Secretary to the Government of the Federation, George
Akume, recently said the Federal Government will soon unveil the audit report
of the probe of the CBN.
The SGF said that the probe report of the CBN when made
public, would reveal how poor governance brought the country to the present
predicament.
According to him, the report will enable Nigerians to know
what really went wrong and how the country got to its present situation.
He said, “Most of these problems confronting us are due to
bad governance. The present government has confronted and is confronting these
challenges. When President Bola Tinubu came on board, he took a very sound
decision at the CBN. That singular act led to a massive improvement in the
capital market, as experts have told us, it is something that has never
happened in the past 15 years.
“We have a new team at the CBN and a special investigator
has been in the CBN for some time now and his result will soon be released and
Nigerians will know what really went wrong and what brought us to where we are
today.”
Also, findings revealed that Obazee had submitted an interim
report to the President’s office.
Multiple officials said the preliminary report was submitted
for necessary action by the President.
“The CBN Special Investigator submitted a preliminary report
to the President’s Office over a week ago. The investigation still continues
but the preliminary report is meant to give the President an idea of what has
been discovered so far,” a top official privy to the development said on
condition of anonymity because he was not authorised to speak on the matter.
It was learnt that the interim report would enable the
president to make some key decisions that would help the country move forward.
Officials said the interim report led to the change of
leadership at the CBN.
The president and his team are said to be currently
reviewing the report with a view to taking an appropriate decision on it soon.
N1.27tn intervention funds
According to a top official, who spoke with The PUNCH on the
condition of anonymity, some top bank officials will be invited as the
investigations proceed over undisbursed intervention funds.
We learnt that N1.27tn intervention funds sit in the
accounts of five banks.
This was based on an analysis of the half-year financial
statements of Access Bank, Fidelity Bank, Guarantee Trust Bank, United Bank for
Africa, and Zenith Bank.
The intervention funds cover lending facilities provided by
the CBN through local banks, and the facilities include Accelerated Agriculture
Development Scheme, Anchor Borrowers’ Programme, Commercial Agriculture Credit
Scheme, Healthcare Sector Intervention Facility, and Paddy Aggregation Scheme.
They also include Micro, Small, and Medium Enterprises
Development Fund, Real Sector Support Facility, 100 for 100 Policy on
Production and Productivity, Export Facilitation Initiative, and the Creative
Industry Financing Initiative.
Findings showed that there was at least N530.07bn worth of
intervention funds in Access Bank.
This included about N3.56bn under the Commercial Agriculture
Credit Scheme, N1.57bn to facilitate the rapid rollout of agent networks across
Nigeria supporting the expansion of a shared Agent Network, N58.84bn under the
salary bailout fund, N99.04bn outstanding balance on the excess crude account
loans, N9.34bn for the Real Sector Support Facility, N1.14bn for the
Accelerated Agricultural Development Scheme.
It also included N955.61m for the Creative Industry
Financing Initiative, N8.62bn for the Non-Oil Export Stimulation Facility, and
N17.64bn for the Health Sector Intervention Facility, among others.
We also learnt that at least N310.52bn of the intervention
funds sit in Fidelity Bank.
It included N80.65bn state bailout fund, N190.06bn Real
Sector Support Facility – Differentiated Cash Reserves Requirement, N7.28bn
Commercial Agriculture Credit Scheme, N2.5bn Paddy Aggregation Scheme, and
N6.36bn 100 for 100 PPP.
We further observed that about N288.42bn of the intervention
funds are in Zenith Bank.
It included N23.54bn Commercial Agriculture Credit Scheme
Loan, N1.86bn Power & Aviation Intervention Fund, N125.14bn salary bailout
fund, N71.53bn Excess Crude Loan Facility, N28.73bn Real Sector Support
Facility and N9.13bn Non-Oil Export Stimulation Facility.
There was about
N115.09bn in GT Bank and N25.16bn in UBA as of June 30, 2023.
The new Governor of the Central Bank of Nigeria, Olayemi
Cardoso, during his screening at the Senate, stated that there is a need to
pull the apex bank from direct development finance interventions to refocus the
priorities of the bank.
According to the new governor of the apex bank, the bank
needs to move into a limited advisory role that supports economic growth rather
than actively play a prominent role in the financing of these projects.
He emphasised the need to restore the apex bank’s
independence and credibility by refocusing on its core mandate and ensuring a
culture of compliance.
“Much has been made of past CBN forays into development
financing such that the lines between monetary policy and fiscal intervention
have become blurred.
“In refocusing the CBN to its core mandate, there is a need
to pull the CBN back from direct development finance interventions into more
limited advisory roles that support economic growth,” he said.
In 2015, the former governor of the CBN, Godwin Emefiele,
stated that the bank had over the years been involved in the financing of
growth-enhancing programmes and projects of the Federal Government.
He stated that these involvements are incidental to the
bank’s core mandates and part of its development and corporate social
responsibilities, to accelerate growth and development of the country’s
economy.
As of October 2022, about N9tn had been released as
intervention funds by the apex bank.
The bank had said that about N3.7tn had been repaid by
beneficiaries while over N5tn was not yet due for recovery.
Agric sector
The agricultural sector has been the major beneficiary of
the intervention funds, especially through the Anchor Borrower Fund and the
Commercial Agriculture Credit Scheme.
About nine banks have at least N208.33bn undisbursed funds
from the CBN for the Anchor Borrower Fund and the Commercial Agriculture Credit
Scheme at little interest rates.
According to the first half financial statements released to
the Nigerian Exchange Limited, three of the banks; Guaranty Trust Holding Company,
Wema Bank and Sterling Financial Holdings had N114.10bn of the Anchor Borrowers
Fund still in their coffers.
While seven banks including GTCO, Wema Bank, Sterling
Financial Holdings, United Bank for Africa, Access Holdings, Zenith Bank Plc,
Fidelity Bank, Stanbic IBTC Holdings and FCMB Group combined had N94.23bn of
the Commercial Agriculture Credit Scheme funds in their books not disbursed as
of the end of June.
The Anchor Borrowers’ Programme was established by the CBN
in line with its developmental function. It was launched by former president
Muhammadu Buhari on November 17, 2015, to create a link between anchor
companies involved in the processing and smallholder farmers of key
agricultural commodities.
The CACS is a scheme powered by the CBN in collaboration
with the Federal Government represented by the Federal Ministry of Agriculture
and Rural Development with the aim of providing concessionary funding for
agriculture so as to promote commercial agricultural enterprises in Nigeria.
So far, there have been controversies about the
beneficiaries and repayments of the ABP fund.
Stakeholders in the economy also have to deal with a high
cost of financing, which has been affecting production and expansion plans in
some sectors of the economy.
According to the financial reports of GTCO, the lender still
had N75.35bn of the Anchor Borrowers Fund as of June 2023 (December 2022:
N78.42bn), which shows that only N3.06bn had been disbursed in six months. The bank revealed that the tenor of the
facility depends on the gestation period of the targeted commodity but will not
exceed two years. The facility is disbursed at an all-inclusive interest rate
of nine per cent.
For the CACS intervention fund, GTCO still had N3.29bn
(December 2022: N5.05bn. The facility is for a period of seven years at two per
cent annual cost to the company. The maximum interest rate to the borrowers
under the scheme is nine per cent annually inclusive of all charges.
Sterling Financial Holdings had N37.90bn of the ABP funds in
its coffers which reflected a N12bn increase in six months showing that it
disbursed less of the loans to the targeted users. For the CACS, Sterling
Holdco had N33.40bn, indicating another increase over N31.59bn recorded as of
December 2023.
Zenith Bank still had N 23.53bn of the CACS intervention
fund in its coffers. Compared to N32.89bn it had as of December, the bank has
disbursed N9.35bn between January and June 2023.
In its report, Stanbic IBTC said that it obtained an
interest-free loan from the CBN for the purpose of on-lending to customers
under the CACS. The tenor is also based on an agreement with individual
beneficiary customers. It had N 6.78bn as of June 2023(December 2022: N8.99bn)
showing N2.21bn was disbursed in the first half of the year.
Access Bank said, “The amount of N3.55bn represents the
outstanding balance on the on-lending facility granted to the Bank by Central
Bank of Nigeria in collaboration with the Federal Government of Nigeria in
respect of Commercial Agriculture Credit Scheme established by both CBN and the
FGN for promoting commercial agricultural enterprises in Nigeria.
“The facility is for a maximum year of seven years at a zero
per cent interest rate to the Bank. The Bank did not provide security for this
facility. From this creditor, the bank has nil undrawn balance as at 30 June
2023.”
Wema Bank in its half-year report said that it had N848.23m
of the AB Fund in its coffers from N1.96bn signifying that it had disbursed
N846.26bn between January and June 2023.
Fidelity Bank reported N7.27bn in yet-to-be disbursed CACS
funds as of June 2023, a decrease compared to N8.08bn in 2022 and FCMB had in
its till N1.82bn of the same intervention fund as of June 2023, down from
N3.58bn as of December 2022, reflecting that N1.76bn had been disbursed.
Experts react
The Chief Executive Officer of the Centre for the Promotion
of Private Enterprise, Dr Muda Yusuf, told The PUNCH on Sunday that it is
necessary to assess the intervention funds in order to find out what went wrong
and what can be done to fix it.
He said, “If you want to reform the system, you have to do a
study of what is on the ground. For the intervention fund, it is good to do an
assessment. What they are doing is an assessment to know, which areas they need
to improve.
“As you know, the default rate is also very high. That is
another reason it is important to do a proper assessment to know what went
wrong and what can be improved.”
Also speaking, a development economist, Dr Aliyu Ilias,
stressed that the apex bank ought not to be involved in handling intervention
funds.
He also criticised the structure of the Anchor Borrowers’
Programme, which has been a major point of controversy.
He said, “First and foremost, CBN should not be involved in
any intervention fund. We have Ministry of Agriculture and the Bank of
Industry. So, any intervention that want to come should go through these
agencies.
“If you look at Anchor Borrower, I think the structure is
not very good. I think there is policy problem and we need to look at it.”
He added that it is usually not advisable to have a CBN
governor with a background in banking as there tends to be a “romance” between
the banks and the apex bank.
“There is no way they will not call those bank CEOs. Some
people need to be called to assess the funds. Banks must have comprise the
criteria or list of people to get the loans,” he noted. -PUNCH.