Banks disburse N132bn intervention fund despite CBN ban – Report

The social programme intervention funds left unused in the coffers of nine Deposit Money Banks reduced to N399.34bn despite the discontinuance of the scheme by the Central Bank of Nigeria a year ago, The PUNCH reports.

The amount was N531.4bn as of December 31, 2023. This means a total sum of N132.05bn was withdrawn from the funds between January and June 2024 with no explanation provided for these transactions in the financial statements of the banks.

This lack of transparency regarding the withdrawals may prompt further scrutiny and questions about the management of the funds and the reasons behind such significant outflows.

Last October, the CBN Governor, Olayemi Cardoso, upon assumption of office, stopped all development finance interventions, stating that the lines between monetary policy and fiscal intervention had become blurred.
Thus, he said that in refocusing the CBN to its core mandate, there was a need to pull the CBN back from direct development finance interventions into more limited advisory roles that support economic growth.

The apex bank governor had reaffirmed his position, emphasizing that Nigerians were experiencing the repercussions of excessive money supply in the economy, highlighting the N27tn Ways and Means loan and the N10.5tn interventions from the previous administration.

The CBN, under former governor, Godwin Emefiele, had delved into several intervention programmes such as the Anchor Borrowers Programme, the 100-for-100 Policy on Production and Productivity, and the Commercial Agriculture Credit Scheme Loan.
Others include the Non-Oil Export Stimulation Facility, the Nigerian Electricity Market Stabilisation Facility, the N1tn Real Sector Facility, the Agribusiness/Small and Medium Enterprise Investment Scheme, and the Micro, Small and Medium Enterprise Development Fund, among others.

Over N9.71tn in development finance intervention disbursements were reportedly made under the previous CBN administration.

Cardoso then said, “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.”

Its advisory roles would include acting “as a catalyst in the propagation of specialised institutions and financial products that support emerging sectors of the economy. Facilitate new regulatory frameworks to unlock dormant capital in land and property holdings.

“Accelerate access to consumer credit and expand financial inclusion to the masses. It would also focus on de-risking instrumentation to increase private sector investment in housing, textiles and clothing, food supply chain, healthcare, and educational supplies.”

However, the latest findings by The PUNCH show that the intervention funds have remained with the banks one year after, and have been reduced by 24.85 per cent or N132.05bn to N399.34bn from N531.4bn within six months.

An analysis of eight bank’s half-year financial statements showed that they still had funds received from the central bank intended for disbursement to beneficiaries.
The banks are Wema Bank, Stanbic IBTC Bank, Access Bank Plc, Sterling Bank, Guaranty Trust Bank, First City Monument Bank, Zenith Bank and United Bank of Africa.  Fidelity Bank is yet to upload its results for the second quarter of 2024.

A further breakdown showed that Zenith Bank still holds the highest amount of intervention funds, totalling N154.81bn from N157.81bn recorded in December 2023, indicating a N3bn reduction.

Access Bank followed closely with an increase of N58.37bn to N152.99bn from N94.62bn recorded in December 2023.
Third on the list is Sterling Bank, with a total intervention of N37.82bn from N80.34bn domiciled with the banks as of December 2023, while United Bank of Africa Bank has N20.99bn.

The intervention funds with Guaranty Trust Bank reduced by N40.81bn to N11.58bn. Other banks include FCMB (N13.17bn), Stanbic IBTC (N6.71bn), and Wema Bank has N1.26bn.

A cursory look at Zenith Bank showed that the bank has N9.56bn under the CBN Commercial Agriculture Credit Scheme, N123.65bn under the Salary Bailout Scheme was approved by the Federal Government to assist state governments in the settlement of outstanding salaries owed their workers, intervention funds for Power & Aviation sector stood at N1.06bn.

For Access Bank, the bank has unused funds from the Central Bank of Nigeria – Anchors borrowers programme worth N4.97bn, Commercial Agriculture Credit Scheme (N2.13bn), Accelerated Agricultural Development Scheme (N96.1) while N21.18bn was unused under the Real Sector And Support Facility at the end of the 2024 second quarter.
Also, GTB has disbursed all of its N40.39bn under the ABP, reduced funding under CACS to N1.39bn and left N868.96m under its Private sector accelerated agriculture development scheme.

Similarly, Sterling Bank has N1.84bn under its Real Sector Support Facility, N34.75bn from the CACS and a CBN unused fund of N37.82bn.

UBA said it has N11.46bn representing the outstanding balance on the Commercial Agriculture Credit Scheme, N196m for the RSSF initiative and N9.33bn for the concessionary loans granted by the Central Bank of Nigeria to some State Governments.

Commenting on the development, the Director/Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, urged the CBN to clarify the reasons for the depletion of funds.

He also provided possible explanations for why the intervention funds might have been kept with the banks.

Speaking in an interview with our correspondent, the financial expert said, “Some of those funds were kept with the banks before this administration and I would imagine that no new funds had gone into the pool of funds that existed before this administration came in but I also know that the CBN governor did say that further interventions will be done through the development banks.

“So it is possible that those funds are being managed in conjunction with the Bank of Industry. The BOI is not a deposit money bank, so they don’t keep funds, but there is a way they partner, and it is the banks that now make the disbursement.
“It is also possible the withdrawn funds were commitments to other applicants. For instance, if the CBN has signed an agreement with a borrower to disburse N1bn, then a new administration stopped the funds; it would be unfair to stop it because there is a new administration. So, existing transactions could have been permitted.

“But I think the CBN still has to explain what is happening. It is important to clarify why those banks still have the funds,” he stressed.

A professor of economics at the University of Uyo, Akpan Ekpo, also believes that the apex bank must provide answers on the intervention funds and what it would be used for.

He said, “It is very possible that the amount was already committed before the programme was stopped by the current governor. That is what I suspect but they still need to explain and be transparent because Nigerian banks can be very funny. CBN should clarify and explain to the public what is happening. They examine these banks and should know what is going on. That’s a lot of money.”

When contacted, the Corporate Communications Department of the CBN, led by the acting Director, Hakama Sidi Ali, promised to respond to the issue but did not do so till this report was filed.