The CBN investigators are inviting banks that received intervention funds totaling N1.27tn.

The ongoing investigation into the actions of the Central Bank of Nigeria may also extend to the CEOs and top management of banks, according to findings.

The PUNCH reports that in an effort to investigate allegations of improper handling of intervention funds by deposit money banks, a number of bank CEOs will be called in for interviews.

 

It was previously reported that the Central Bank of Nigeria could be asked to retract its recently published audited annual financial reports.

 

This followed the discovery of accounting anomalies by the team looking into the central bank.

 

CBN released its financial accounts for 2016–2022, as a Special Investigator appointed by President Bola Tinubu continues to investigate the financial services sector regulator.

 

On 28 July, Tinubu appointed Jim Obazee, the former CEO of the Financial Reporting Council of Nigeria, to the position of Special Investigator to look into the actions of the central bank while Godwin Emefiele was suspended as governor.

 

The special investigator is looking into not only the CBN but also the Nigerian National Petroleum Corporation Limited, the Federal Regulatory Commission, and other government business entities.

 

In a letter he personally signed, the president explained that the action was part of the government’s ongoing fight against corruption.

 

According to the letter dated July 28, 2023, “this administration is, today, continuing the fight against corruption by appointing you as a Special Investigator, to investigate the CBN and Related Entities in accordance with the fundamental objectives set forth in Section 15(5) of the Constitution of the Federal Republic of Nigeria 1999 (as amended). You’ll be starting in this role right away, and I expect you to report directly to my office.

 

The full terms of your engagement as Special Investigator will be communicated to you in due course, but in the meantime, you must immediately take action to ensure the strengthening and probity of key Government Business Entities, further block leakages in the Central Bank of Nigeria and related GBEs, and provide a comprehensive report on public wealth currently in the hands of corrupt individuals and establishments (whether private or public).

 

Working with relevant security and anti-corruption agencies, your mission is to probe the Central Bank of Nigeria (CBN) and any associated organisations. I need to be updated once a week on how things are going.

 

A copy of the president’s order suspending Godwin Emefiele as CBN governor on June 9, 2023, was also included.

 

This paper reveals that the CBN Special Investigator is assisted in his investigation by a group of accountants, auditors, and forensic accountants.

 

Recently, George Akume, the Secretary to the Government of the Federation, stated that the federal government will soon release the audit report of the CBN investigation.

 

When the CBN’s investigation report is made public, the SGF said it will show how poor governance led to the current crisis.

 

He thinks the report will shed light on the real reasons Nigeria is in its current state of affairs.

 

Most of the issues we’re facing, he said, can be traced back to poor leadership. The current administration has met and is meeting these challenges head on. When President Bola Tinubu joined the team, he made a wise decision at the Central Bank of Nigeria. Experts have told us that this single action is unprecedented in the past 15 years, and that it led to a dramatic improvement in the capital market.

 

The CBN has a new team, and an investigator has been working there for some time; his findings will be made public soon, letting Nigerians know what happened.

 

In addition, this publication’s research showed that Obazee had delivered a status report to the Presidency.

 

The preliminary report was submitted, according to multiple officials, so the president can take any necessary action.

 

Over a week has passed since the CBN Special Investigator delivered an initial report to the President’s Office. A high-ranking official told our correspondent, on condition of anonymity because he was not authorised to speak on the matter, that the investigation is still ongoing but that the preliminary report is meant to give the President an idea of what has been discovered so far.

 

The interim report was expected to provide the president with the information he needed to make some crucial policy decisions that would propel the country forward.

 

The CBN reportedly had a leadership change as a result of the interim report.

 

The president and his staff are reportedly looking over the report to make a decision as soon as possible.

 

Investment of N1.27 trillion

 

An anonymous high-ranking official told our correspondent that some high-ranking bank officials will be invited to participate in the ongoing investigations into the missing intervention funds.

 

It was discovered that five banks hold a total of N1.27tn in intervention funds.

 

Half-year financial statements from Access Bank, Fidelity Bank, Guarantee Trust Bank, United Bank for Africa, and Zenith Bank were analysed to come to this conclusion.

 

CBN lending facilities such as the Accelerated Agriculture Development Scheme, the Anchor Borrowers’ Programme, the Commercial Agriculture Credit Scheme, the Healthcare Sector Intervention Facility, and the Paddy Aggregation Scheme are all covered by the intervention funds provided by local banks.

 

Other initiatives include the Export Facilitation Initiative, the Creative Industry Financing Initiative, the 100 for 100 Policy on Production and Productivity, and the Micro, Small, and Medium Enterprises Development Fund.

 

The results indicated that at least N530.07bn in intervention funds were held by Access Bank.

 

There was an outstanding balance of N99.04 billion on the excess crude account loans, N9.34 billion for the Real Sector Support Facility, N1.14 billion for the Accelerated Agricultural Development Scheme, N3.56 billion for the Commercial Agriculture Credit Scheme, N58.84 billion for the Salary Bailout Fund, N1.57 billion to facilitate the rapid rollout of agent networks across Nigeria supporting the expansion of a shared Agent Network, and N9.34 billion for the Real Sector Support Facility.

 

Non-Oil Export Stimulation Facility: N8.62bn; Health Sector Intervention Facility: N17.64bn; Creative Industry Financing Initiative: N955.61m.

 

The funds from the intervention, estimated at N310.52bn, are reportedly held in Fidelity Bank.

 

State bailout funds totaled N80.65 billion, the Real Sector Support Facility – Differentiated Cash Reserves Requirement was N190.06 billion, the Commercial Agriculture Credit Scheme provided N7.28 billion, the Paddy Aggregation Scheme provided N2.5 billion, and the 100 for 100 PPP provided N6.36 billion.

 

It was also discovered that Zenith Bank currently holds about N288.42bn of the intervention funds.

 

Excess crude loan facility of N71.53 billion; real sector support facility of N28.73 billion; non-oil export stimulation facility of N9.13 billion; commercial agriculture credit scheme loan of N23.54 billion; salary bailout fund of N125.14 billion.

 

On the other hand, as of the 30th of June, 2023, there was approximately N115.09bn in GT Bank and N25.16bn in UBA.

 

Olayemi Cardoso, the new Governor of the Central Bank of Nigeria, said as much during his screening at the Senate. He said that in order to refocus the bank’s priorities, the apex bank needs to withdraw from direct development finance interventions.

 

The new governor of the central bank has stated that the institution needs to shift from financing major infrastructure projects to instead taking on a more limited advisory role that promotes economic growth.

 

He stressed the importance of refocusing on the central bank’s core mandate and establishing a culture of compliance in order to restore the institution’s independence and credibility.

 

It has been widely argued that the distinction between monetary policy and fiscal intervention has blurred as a result of the CBN’s previous forays into development financing.

 

“In refocusing the CBN to its core mandate, there is a need to pull back from direct development finance interventions into more limited advisory roles that support economic growth,” he said.

 

Former CBN governor Godwin Emefiele said in 2015 that the bank had long financed federal government programmes and projects intended to spur economic growth.

 

He explained that the bank’s involvements in these areas are tangential to its core mandates and are an integral part of its development and corporate social responsibilities in order to hasten the expansion and modernization of the national economy.

 

As of October 2022, the central bank had released roughly N9tn in intervention funds.

 

The bank reported that over N5 trillion had not yet been recovered, while about N3.7 trillion had been paid back.

 

Industry of Agriculture

 

The Anchor Borrower Fund and the Commercial Agriculture Credit Scheme, in particular, have helped the agricultural sector receive intervention funds.

 

With little interest, the CBN has left N208.33bn in nine banks’ accounts for use with the Anchor Borrower Fund and the Commercial Agriculture Credit Scheme.

 

Three of the banks, including Guaranty Trust Holding Company, Wema Bank, and Sterling Financial Holdings, still had N114.10bn in the Anchor Borrowers Fund as of their first-half financial statements submitted to the Nigerian Exchange Limited.

 

At the end of June, a total of N94.23bn of Commercial Agriculture Credit Scheme funds were sitting on the books of seven banks (GTCO, Wema Bank, Sterling Financial Holdings, United Bank for Africa, Access Holdings, Zenith Bank Plc, Fidelity Bank, Stanbic IBTC Holdings, and FCMB Group).

 

In keeping with its developmental role, the CBN established the Anchor Borrowers’ Programme. Aimed at connecting smallholder farmers of key agricultural commodities with anchor companies involved in processing, the initiative was launched by then-president Muhammadu Buhari on November 17, 2015.

 

To encourage commercial agriculture in Nigeria, the Central Bank of Nigeria (CBN) and the Federal Ministry of Agriculture and Rural Development (FMARD) have launched the Concessional Agricultural Credit Scheme (CACS).

 

The ABP fund’s recipients and repayments have been the subject of controversy thus far.

 

Some economic actors have been unable to carry out their production and expansion plans because of the high cost of financing.

 

As of June 2023 (December 2022: N78.42 bn), only N3.06 bn had been disbursed from GTCO’s Anchor Borrowers Fund, according to the company’s financial reports. The bank stated that the length of the facility is proportional to the expected gestation period of the commodity being financed, but will never be longer than two years. The nine percent interest rate applies to all payments made on the facility.

 

GTCO still had N3.29bn (December 2022: N5.05bn) in the CACS intervention fund. The facility is for seven years at a cost of two percent per year to the company, and the maximum interest rate to the borrowers under the scheme is nine percent per year, inclusive of all charges.

 

The ABP funds held by Sterling Financial Holdings increased by N12 billion in just six months, demonstrating that fewer loans were disbursed to their intended recipients. The CACS funds held by Sterling Holdco also increased, from N31.59 billion in December 2023 to N33.40 billion.

 

In June of 2023, Zenith Bank reported that it had N23.53 billion left over from the CACS intervention fund, down from N32.89 billion in December.

 

Stanbic IBTC reported having N 6.78bn as of June 2023 (December 2022: N8.99bn), with N2.21bn having been disbursed in the first half of the year, all thanks to an interest-free loan from the CBN for on-lending to customers under the CACS.

 

To promote commercial agricultural enterprises in Nigeria, the Central Bank of Nigeria (CBN) and the Federal Government of Nigeria (FGN) established the Commercial Agriculture Credit Scheme. According to Access Bank, the amount of N3.55bn represents the outstanding balance on the on-lending facility granted to the Bank by the CBN and the FGN.

 

The Bank will receive no interest on the facility for up to seven years. The Bank did not guarantee this credit line. As of 30 June 2023, the bank has no undrawn balance with this creditor.

 

In its half-yearly report, Wema Bank stated that it had disbursed N846.26 billion from the AB Fund between January and June of 2023, bringing the total amount available to N848.23 million.

 

As of June 2023, Fidelity Bank had N7.27bn in CACS funds waiting to be disbursed, down from N8.08bn in 2022; likewise, FCMB had N1.82bn of the same intervention fund in its till as of June 2023, down from N3.58bn as of December 2022, reflecting that N1.76bn had been disbursed.

 

Specialists React

 

According to Dr Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise, an evaluation of the intervention funds is required to determine what went wrong and what can be done to rectify the situation.

 

He remarked, “You have to study the situation on the ground if you want to reform the system. It is helpful to conduct an evaluation of the intervention fund. This evaluation is helping them figure out where they stand and where they need to make changes.

 

The default rate is extremely high, as you are well aware. That’s why you need an accurate evaluation so you can find out where things went wrong and where you can make improvements.

 

Dr. Aliyu Ilias, a development economist, agreed that the central bank should stay out of the intervention fund management business.

 

He also had harsh words for the controversial design of the Anchor Borrowers’ Programme.

 

He stressed that the Central Bank of Nigeria (CBN) should stay out of any intervention fund. There is a Department of Agriculture and a Department of Industry and Commerce. Thus, any desired intervention must be coordinated with such bodies.

 

Looking at Anchor Borrower, I don’t think the framework holds up very well. I believe there is a policy issue that requires investigation.

 

He also said that having a banking expert as CBN governor is not ideal because of the potential for a “romance” to develop between the banks and the central bank.

 

There is absolutely no way they won’t contact those bank CEOs. The funds need to be evaluated, so it’s time to call in the experts. The eligibility requirements/list of borrowers would have been determined by the banks, he remarked.