A recent report released by the Central Bank of Nigeria (CBN) has shed light on the status of intervention loans disbursed by the bank, revealing concerning figures. Out of the total loans amounting to N10.3 trillion disbursed as intervention, N193 billion has been declared lost, while another N418.9 billion remains doubtful.
The report, last updated in September 2023, provides a detailed breakdown of the bank’s intervention funds over the years. It highlights that of the N10.3 trillion disbursed, N4.4 trillion has been repaid, leaving approximately N5.8 trillion outstanding. Some loans are tenured, meaning their principal repayments are scheduled for future dates.
However, the report notes that only N969.8 billion of the outstanding amount was past due, with some loans having repayment tenures extending beyond 2023. Consequently, the percentage of repayments to amounts due is calculated at 75.8%.
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Further analysis in the report reveals that N289 billion of the loans are performing, N67.9 billion are classified as substandard, and N418.9 billion are labeled doubtful, with N193.9 billion declared lost.
The apex bank’s governor, Yemi Cardoso, has criticized the intervention funds initiated under the leadership of his predecessor, Godwin Emefiele, contending that the bank failed to implement the interventions appropriately.
In a significant shift in approach, the CBN announced last December a suspension of applications for new loans under its development finance intervention funds program. This suspension marks a departure from the central bank’s previous emphasis on development finance interventions.
Moreover, Deposit Money Banks have been tasked with the recovery of previously granted loans under the scheme, affecting more than 4.6 million farmers and over 1,358 projects that have benefitted from various initiatives over the years.
Cardoso has expressed intentions to steer the CBN away from development finance interventions, prioritizing its core mandate of ensuring price and monetary stability. A circular issued by the CBN in December outlined the bank’s transition towards limited policy advisory roles supporting economic growth.
“In furtherance of the Central Bank of Nigeria’s new policy thrust focusing on its core mandate of ensuring price and monetary stability, the Bank has commenced its pullback from direct development financing interventions,” a circular issued in December by the CBN said.
“Accordingly, the CBN would be moving into more limited policy advisory roles that support economic growth.
“In consideration of the above, the CBN wishes to inform you that it has stopped accepting new loan applications for processing under any of its existing intervention programmes and schemes.”
Under Emefiele’s tenure, the CBN delved into encouraging backward integration through initiatives like the Anchor Borrowers Programme (ABP), which saw over N1.09 trillion lent to millions of farmers nationwide. In total, the CBN disbursed more than N5.25 trillion to individuals and companies across various sectors.
Cardoso views this as a deviation from the central bank’s core mandate, resulting in a lack of clarity in the relationship between fiscal and monetary policies, among other challenges. He argues that the CBN’s engagement in quasi-fiscal activities diverted resources away from its primary objectives and ventured into areas where expertise was limited.
“Hitherto, the CBN had strayed from its core mandates and was engaged in quasi-fiscal activities that pumped over N10 trillion in the economy through almost different initiatives in sectors ranging from agriculture, aviation, power, youth and many others. These clearly distracted the Bank from achieving its own objectives and took it into areas where it clearly had limited expertise.”