Nigeria’s Central Bank (CBN) has suspended all new development finance programs, leaving over N531.4 billion ($1.2 billion) in undisbursed funds in the hands of nine commercial banks.
CBN Governor Shifts Focus:
- CBN Governor Olayemi Cardoso halted all intervention programs in October 2023.
- He aims to refocus the bank on core monetary policy duties and move away from direct development financing.
- The CBN previously offered various programs aimed at stimulating economic growth in sectors like agriculture, manufacturing, and small businesses. These included the Anchor Borrowers Programme, which connected farmers with lenders, and the N1 trillion Real Sector Facility, which provided loans to businesses in critical industries.
Unused Funds in Banks:
- Zenith Bank holds the most unutilized funds (N157.81bn), followed by Fidelity Bank (N98.85bn) and Access Bank (N94.63bn).
Recovery Efforts and Uncertain Future:
- The CBN is reportedly working on recovering these unused funds, but details are unclear. The exact procedures and timeline for retrieval remain unknown.
- Banks plan to hold onto the funds until instructed by the CBN.
- Small businesses urge the CBN to allow disbursement of the remaining funds, arguing that these resources are crucial for growth and job creation.
Debt Recovery in Existing Programs:
- The CBN is collaborating with the Nigerian Financial Intelligence Unit (NFIU) to recover outstanding debts from the N1 trillion Anchor Borrowers’ program.
- Only 30% of the disbursed funds have been repaid so far, raising concerns about the effectiveness of previous programs and the potential impact on the financial system.
Overall, the CBN’s shift in policy has created an uncertain situation. Billions designated for development programs remain unutilized, raising questions about the efficiency of the previous system. The CBN is working on recovering these funds, but the details remain unclear. Meanwhile, efforts are underway to recover debts from previous initiatives, highlighting potential shortcomings in program design or implementation. Small businesses are left in limbo, hoping for access to the remaining funds to support their growth.
