In the ongoing investigation into the Central Bank of Nigeria’s activities, News reports have uncovered that the scrutiny may extend to include Chief Executive Officers and senior management personnel of various banks. The investigation seeks to examine potential discrepancies related to the management of intervention funds by deposit money banks.
This revelation comes after prior reports indicated that the Central Bank of Nigeria might be compelled to withdraw its recently released audited annual financial reports. The decision was prompted by a team of investigators who uncovered irregularities and inconsistencies within the financial accounts.
This unfolding development traces back to August when the CBN published its financial reports for the years 2016 to 2022. It coincided with a comprehensive probe of the financial services sector regulator, instigated by Special Investigator Jim Obazee, appointed by President Bola Tinubu. Obazee’s mandate extends beyond the CBN and encompasses investigations into the Nigerian National Petroleum Corporation Limited (NNPC), Financial Reporting Council (FRC), and other Government Business Entities (GBEs).
President Tinubu, in a letter dated July 28, 2023, personally appointed Obazee as a Special Investigator. This appointment, rooted in the government’s commitment to combat corruption, tasked Obazee with strengthening the integrity of key GBEs, plugging financial leaks within the CBN and related GBEs, and delivering a comprehensive report on corrupt individuals and entities, whether public or private.
The investigative process involves a specialized team comprising accountants, auditors, and forensic accountants. This team is meticulously delving into the intricacies of the CBN’s operations and related entities.
The Secretary to the Government of the Federation, George Akume, has revealed that the Federal Government intends to release the audit report of the CBN’s probe. Akume believes that this report will shed light on the governance issues responsible for the country’s current challenges.
He commented, “Most of these problems confronting us are due to bad governance. The present government has confronted and is confronting these challenges.” He alluded to a pivotal decision made at the CBN that positively impacted the capital market during President Tinubu’s tenure.
Obazee has submitted an interim report to the President’s office, marking a significant milestone in the investigation. This preliminary report offers insight into the findings thus far, allowing the President to make informed decisions regarding the next steps.
One aspect under scrutiny involves intervention funds totaling N1.27 trillion, which are held in the accounts of five major banks—Access Bank, Fidelity Bank, Guarantee Trust Bank, United Bank for Africa, and Zenith Bank. These funds encompass various lending facilities provided by the CBN, addressing sectors such as agriculture, healthcare, and small businesses.
For instance, Access Bank holds at least N530.07 billion in intervention funds, covering schemes like the Commercial Agriculture Credit Scheme, agent network expansion, salary bailout, and more.
Fidelity Bank, on the other hand, retains a significant portion of these funds, totaling at least N310.52 billion. This includes allocations for state bailouts, Real Sector Support Facility, Commercial Agriculture Credit Scheme, and other programs.
As the investigation progresses, it is likely that bank officials will be summoned to provide further information regarding these intervention funds. These revelations underscore the gravity of the investigation and its potential ramifications on the financial sector in Nigeria.
The newly appointed Governor of the Central Bank of Nigeria, Olayemi Cardoso, has outlined his vision during a Senate screening session. Governor Cardoso expressed the need to reorient the apex bank’s role away from direct involvement in development finance interventions, advocating for a shift toward a more limited advisory role that bolsters economic growth.
In his address to the Senate, Governor Cardoso stressed the importance of restoring the Central Bank’s independence and credibility by refocusing on its core mandate and fostering a culture of compliance. He cited concerns over the historical blurring of lines between monetary policy and fiscal intervention due to past CBN forays into development financing.
Governor Cardoso articulated his vision, stating, “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.”
This redirection comes in light of past CBN Governor Godwin Emefiele’s assertion in 2015 that the bank had been actively involved in financing various growth-enhancing programs and projects initiated by the Federal Government. These endeavors were seen as part of the CBN’s developmental and corporate social responsibilities aimed at accelerating economic growth and development.
As of October 2022, an impressive sum of approximately N9 trillion had been disbursed as intervention funds by the Central Bank. Notably, the agricultural sector has been a primary beneficiary, particularly through initiatives like the Anchor Borrower Fund and the Commercial Agriculture Credit Scheme.
Several banks have sizeable undisbursed funds from the CBN earmarked for these programs. Among them, Guaranty Trust Holding Company, Wema Bank, and Sterling Financial Holdings collectively held N114.10 billion of the Anchor Borrowers Fund, while seven banks, including United Bank for Africa, Access Holdings, Zenith Bank Plc, and Fidelity Bank, retained N94.23 billion of the Commercial Agriculture Credit Scheme funds as of the end of June.
The Anchor Borrowers’ Programme, initiated in 2015, serves as a vital link between anchor companies and smallholder farmers, focusing on key agricultural commodities. Meanwhile, the Commercial Agriculture Credit Scheme, a collaboration between the CBN and the Federal Ministry of Agriculture and Rural Development, provides concessionary funding to promote commercial agricultural enterprises in Nigeria.
Controversies have arisen concerning the beneficiaries and repayments of the Anchor Borrowers Fund. Additionally, the high cost of financing has adversely impacted production and expansion plans in various sectors of the economy.
Governor Cardoso’s vision to refocus the Central Bank’s role raises critical questions about the future direction of development financing in Nigeria. The assessment of these intervention funds and potential reforms will be instrumental in addressing these challenges and ensuring effective economic growth initiatives.
Notably, experts in the field have highlighted the importance of conducting a comprehensive assessment of the intervention funds to identify areas for improvement. They have also raised concerns about the structural aspects of programs like the Anchor Borrowers’ Programme and the need to channel intervention funds through relevant government agencies rather than the Central Bank. These developments signal a pivotal moment in Nigeria’s financial landscape as the nation strives to optimize its economic growth initiatives.
