CBN Investigator Launches Inquiry into Banks Regarding N1.27tn Intervention Funds 

The ongoing investigation into the activities of the Central Bank of Nigeria (CBN) may also involve probing the Chief Executive Officers and top management staff of banks. The investigation seeks to examine the management of intervention funds by deposit money banks and may result in bank CEOs being summoned.

Previously, discrepancies and irregularities were discovered in the financial accounts of the CBN, prompting discussions about withdrawing the bank’s audited annual financial reports.

The probe into the CBN is being conducted by a Special Investigator appointed by President Bola Tinubu, who is also investigating other government entities based on the intervention funds.

The President appointed Jim Obazee as the Special Investigator to carry out this anti-corruption effort, citing the fundamental objectives of the Constitution. Obazee and his team, consisting of accountants and forensic experts, are actively conducting the investigation.

George Akume, Secretary to the Government of the Federation, mentioned that the audit report of the CBN probe will soon be unveiled and will shed light on the issues of governance and financial management.

An interim report has already been submitted to the President’s office, and it is expected to inform key decisions that will help address the situation. This interim report has reportedly influenced leadership changes at the CBN. The President and his team are currently reviewing the interim report, and further decisions are anticipated to follow soon.

What you should know about the intervention funds

An investigation, conducted on an anonymous top official, reveals that some senior officials of banks may be summoned as part of an ongoing investigation into undisbursed intervention funds.

The investigation discovered that approximately N1.27 trillion in intervention funds remains in the accounts of five major banks, as per an analysis of the half-year financial statements of Access Bank, Fidelity Bank, Guaranty Trust Bank, United Bank for Africa, and Zenith Bank. 

These intervention funds cover various lending facilities provided by the Central Bank of Nigeria (CBN) through local banks, including programs like the Accelerated Agriculture Development Scheme, Anchor Borrowers’ Programme, Commercial Agriculture Credit Scheme, Healthcare Sector Intervention Facility, and Paddy Aggregation Scheme, among others.

Specifically, Access Bank holds at least N530.07 billion in intervention funds, encompassing various schemes and initiatives. Fidelity Bank retains approximately N310.52 billion in intervention funds, covering different programs. Zenith Bank accounts for around N288.42 billion in intervention funds, comprising various loans and facilities.

Additionally, GT Bank holds about N115.09 billion, and UBA holds N25.16 billion in intervention funds as of June 30, 2023.

The new Governor of the Central Bank of Nigeria, Olayemi Cardoso, emphasized the need to transition the apex bank away from direct development finance interventions towards a more limited advisory role that supports economic growth. This shift is aimed at restoring the independence and credibility of the apex bank while ensuring a focus on its core mandate and compliance culture.

The CBN has been involved in financing growth-enhancing programs and projects of the Federal Government. However, the new leadership seeks to streamline the CBN’s role and prioritize its core functions. As of October 2022, approximately N9 trillion had been released as intervention funds by the CBN, with a significant portion yet to be recovered.

How the Agric sector has been a major beneficiary

An analysis reveals that the agricultural sector has been the primary beneficiary of CBN intervention funds, particularly through programs like the Anchor Borrower Fund and the Commercial Agriculture Credit Scheme (CACS).

Approximately nine banks collectively hold at least N208.33 billion in undisbursed funds from the CBN for the Anchor Borrower Fund and the Commercial Agriculture Credit Scheme, offering favorable interest rates.

Among these banks, Guaranty Trust Holding Company (GTCO), Wema Bank, and Sterling Financial Holdings have N114.10 billion of the Anchor Borrowers Fund remaining. Meanwhile, 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, collectively hold N94.23 billion in the Commercial Agriculture Credit Scheme funds as of the end of June.

The Anchor Borrowers’ Programme was initiated by the CBN to create a link between anchor companies involved in processing and smallholder farmers of key agricultural commodities. The CACS, on the other hand, is aimed at providing concessionary funding for agriculture to promote commercial agricultural enterprises in Nigeria.

Controversies have arisen regarding the beneficiaries and repayments of the Anchor Borrower Fund. Additionally, high financing costs have been affecting production and expansion plans in various sectors of the economy.

As per GTCO’s financial reports, the bank still held N75.35 billion of the Anchor Borrowers Fund as of June 2023, with only N3.06 billion disbursed in six months. For the CACS intervention fund, GTCO had N3.29 billion.

Sterling Financial Holdings had N37.90 billion of the ABP funds and N33.40 billion of the CACS funds. Zenith Bank had N23.53 billion of the CACS intervention fund. Stanbic IBTC reported N6.78 billion of CACS funds as of June 2023. Access Bank held N3.55 billion of the on-lending facility for the Commercial Agriculture Credit Scheme.

Wema Bank had N848.23 million of the Anchor Borrower Fund. Fidelity Bank reported N7.27 billion in yet-to-be-disbursed CACS funds, and FCMB had N1.82 billion of the same intervention fund. These findings reflect the status of the intervention funds and their disbursement among the mentioned banks.

How experts react

Dr. Muda Yusuf, the Chief Executive Officer of the Centre for the Promotion of Private Enterprise, emphasized the need to assess intervention funds to identify shortcomings and areas for improvement. He pointed out the high default rate and the importance of a proper assessment to understand what went wrong and how to enhance the system.

Dr. Aliyu Ilias, a development economist, criticized the involvement of the Central Bank of Nigeria (CBN) in handling intervention funds. He suggested that such interventions should go through existing agencies like the Ministry of Agriculture and the Bank of Industry instead of the CBN. He also raised concerns about the structure of the Anchor Borrowers’ Programme and highlighted policy issues that need to be addressed.

Dr. Ilias mentioned the potential conflicts of interest when a CBN governor has a banking background, as there can be a “romantic” relationship between banks and the apex bank. He suggested that certain individuals may need to be called in to assess the funds and determine if the banks met the loan criteria.