• …N12.7bn real sector fund, others also in bank’s tills

AS farmers seek cheap funds to produce food for Nigerians, over N75 billion of the Central Bank of Nigeria (CBN)’s Anchor Borrowers Fund (ABF) is sitting in the tills of Guaranty Trust Holding Company PLC (GTCO), also known as Guaranty Trust Bank (GTB), Economy Post can authoritatively report.

According to the second quarter 2023 financial statements released to the Nigerian Exchange Limited, the Tier-1 bank has N75.359 billion of the Anchor Borrowers Fund sitting in its coffers, which has not been lent to farmers.

Based on the details on the financial statements, GTB had N78.424 billion ABF in December 2022 but lent out only 3.065 billion in six months to June 2023, leaving a balance of N75.359 billion.

Questions are being asked as to why GTB lent out only N3.065 billion to farmers in six months when players in the agric value chain complain that funding is among their biggest challenges.

Nigeria’s central bank started the Anchor Borrowers’ Programme (ABP) during the tenure of the immediate past President, Mr Muhammadu Buhari, with a view to creating economic linkages between smallholder farmers and reputable companies involved in the production and processing of key agricultural commodities.

The fund for the project is domiciled in deposit money banks for onward lending to farmers. However, several farmers have complained that they cannot obtain the fund owing to the reluctance by banks to lend as exemplified by stringent conditions attached to its access.

According to the CBN, the tenor of the facility depends on the gestation period of the targeted commodity, though it must not exceed two years. The facility is disbursed at an interest rate of 9 percent. Deposit money banks say that the loan was repriced from a maximum rate of 9 percent to 5 percent due to forbearance.

GTB’s Pattern of lending

In 2020, GTB got N2.997 billion of the ABP’s war chest from the CBN. The fund rose to N66.827 billion in 2021 and further to N78.424 billion in 2022. However, it fell to N75.359 billion by June 2023, meaning that this was the only time the money was lent to farmers between December 2020 and June 2023.

Real Sector, MSME funds also in the bank

Apart from the ABF, the bank also has the Real Sector Support Fund (RSSF) valued at N12.705 billion in its tills. The fund stood at N15.471 billion in December 2022 but fell to N12.705 billion in June 2023. This implies that only N2.766 billion was lent to manufacturers and players in the productive sector in six months.

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In December 2018, the RSSF stood at N25.292 billion, meaning that N12.587 billion of the fund was disbursed to manufacturers in four and a half years. There are other funds sitting in the bank, including the Excess Crude Account and the MSME Development Fund.

Funds may not be lent out

Due to several abuses of the CBN Act by the now ousted Governor Godwin Emefiele, the new helmsman at the apex bank, Mr Yemi Cardoso, has announced that all intervention programmes have been suspended.

During his screening at the Senate on September 27, 2023, Cardoso had said the CBN would no longer continue with its intervention programmes.

“Much has been made of past CBN forays into development financing such that the lines between monetary policy and fiscal intervention have become blurred. 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,” he said.

This means the over N75 billion ABF and N12 billion RSSF sitting in GTB may be returned to the CBN after the conclusion of work by a special investigator appointed by President Bola Tinubu to examine the apex bank’s books, Mr Jim Obazee.

Funding, a major challenge

Funding is a major challenge facing farmers and manufacturers. Many farmers obtain loans at 20-35 percent interest rates from financial institutions, and a large number of them cannot have access to intervention funds.

An Ebonyi State-based rice farmer, Mr Livinus Igboke, said accessing the ABF fund was an uphill task.

Ighoke, who hails from  Ndinwikwe village in Izzi Local Government Area, told Economy Post that he had never been privileged to have access to any intervention fund.

“I only hear about them,” Ighoke, who farms four hectares of rice every planting season, said.

“I have tried to access the ABF from a bank, but they said it was not possible,” he added.

An Ogun State farmer, Ms Deborah Adeogun, said she could not access intervention funds due to her low privileged status.

“I hear about those funds, but I have not been able to access them because I do not know anybody,” he claimed.

Manufacturers themselves are also hard hit by poor funding access. According to the Manufacturers Association of Nigeria (MAN), members of the group got loans from commercial banks at an average interest rate of 24 percent in the first half of 2023.

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“Undoubtedly, one of the major hurdles confronting the manufacturing sector in the country is the high cost of obtaining funds,” Director-General of MAN, Mr Segun Ajayi-Kadir, said in a statement sent to Economy Post.

“This challenge is substantiated by data gathered during the fieldwork for the first half of 2023 report. According to this data, the average lending rate to the manufacturing sector from commercial banks remained high at 24 percent when compared with what was recorded in the corresponding half of 2022.

“However, the cost of funds for the manufacturers increased by 2.0 percentage points
when compared with 22.0 percent recorded in the second half of 2022. The lending rates
offered by commercial banks to industries are significantly influenced by the continuous upward adjustments in the Monetary Policy Rate. These adjustments aim to maintain a favorable real interest rate environment, with the goal of attracting foreign investment inflow, defending the domestic currency (Naira) and curbing the spiraling inflation,” MAN noted.

Funding is indispensable for manufacturers, farmers

Experts have waded into the situation, asking banks to begin to see farmers and manufacturers as partners.

An economist, Dr Ezra Mamman, said funds should not sit in banks when the people who needed them were in the streets in search of them.

“Funding manufacturing and agriculture should be our priority now as a country. Both sectors contribute 30-32 percent to the Nigerian economy and should be properly funded. That aside, I will not blame any bank for being conservative with lending because the CBN should have given them a lending target in such a way that any bank that does not meet the target will be sanctioned,” he noted.

An financial expert, Mr Ugochukwu Adionu, cautioned that banks should be allowed to do their due diligence before lending the money, but added that financial institutions were being too conservative.

“Financial institutions are focused on sectors that give them immediate returns such as retail, imports and oil/gas. However, this is really not helping the nation at this critical point. We must finance critical economic sectors aggressively. Having said that, I will not get myself involved in forcing banks to lend because there will be defaults by so doing.”

A senior official at a Tier-1 bank, who pleaded anonymity, said each bank was being careful of lending to avoid being blamed for defaults.

“There is over N1 trillion defaults already in this scheme, and every bank will be held responsible once huge defaults occur from its end. Also, banks want to ensure that those taking such loans have defined identities.”

GTB keeps mum

Repeated texts and WhatsApp messages sent to the Chief Communication Officer, GTCO, Ms Oyinade Adegite, to explain why the huge amounts were sitting in the bank without being substantially lent to farmers and manufacturers were not responded to.