Debtors of the Federal Government’s loan and empowerment schemes are about to be in shock as the Central Bank of Nigeria has given an instruction to banks to follow up and recover all unrepaid loans borrowed from the Apex bank.
In a bold departure from its previous role in direct development financing, the Central Bank of Nigeria (CBN) has executed a strategic pivot, placing the responsibility of loan recoveries under development finance intervention funds squarely on the shoulders of banks. This pivotal shift, as communicated in a circular signed by Sa’ad Hamidu, the Acting Director of the Development Finance Department, signifies a dynamic evolution in the country’s financial landscape.
Under the leadership of Governor Olayemi Cardoso, the CBN has been a key player in disbursing a staggering N10 trillion through various intervention schemes. The impact of this financial infusion is particularly evident in the disbursement of N41.02 billion to numerous agricultural projects within the span of September and October 2022 alone. This injection of funds into the Anchor Borrowers’ Programme (ABP) has seen a total disbursement of N1.07 trillion, benefiting 4.6 million smallholder farmers engaged in cultivating 21 commodities across the nation.
The CBN’s commitment to fostering economic growth is further underscored by the allocation of N300 million to fund large-scale agricultural projects under the Commercial Credit (CACs) scheme. This move has contributed to a cumulative payment of N745.31 billion under the initiative.
Additionally, the bank released N48.30 billion under the N1 trillion Real Sector Facility, supporting seven new real sector initiatives spanning agriculture, manufacturing, and services. This brings the total disbursement under the facility to a substantial N2.15 trillion, impacting 437 projects throughout Nigeria.
In a circular addressing banks’ chief executives, the CBN explicitly outlined its new policy thrust, emphasizing a pullback from direct development financing interventions. The circular states, “Considering the above, the CBN wishes to inform you that it has stopped accepting new loan applications for processing under any existing intervention programmes and schemes.”
Despite this strategic shift, the circular reassures that interest rates and other terms and conditions on existing facilities remain unchanged. It further underscores that banks are now tasked with the recovery of outstanding balances on facilities previously accessed through them, marking a significant transition in the dynamics of financial operations in Nigeria. This move aligns with the CBN’s renewed focus on limited policy advisory roles that support overall economic growth, reinforcing its core mandate of ensuring price and monetary stability.
