….Experts say banks trading with funds
One of Nigeria’s biggest banks, Zenith Bank Plc, has lent only 7 percent of the Central Bank of Nigeria (CBN)’s N311.19 billion intervention funds in its tills over a period of six months, Economy Post has learnt.
As at December 2022, Zenith Bank warehoused N311.19 billion belonging to the CBN’s multiple intervention programmes, according to the bank’s half-year 2023 financial statements recently released to the Nigerian Exchange Limited.
The funds, however, reduced by only N22.77 billion in June 2023, implying that the bank lent only 7.32 percent of the money to manufacturers, small businesses and other players in the economy over the period.
The bank failed to lend the intervention funds in its tills despite the scramble for cheap funds by businesses, particularly manufacturers and small enterprises.
The funds sitting in Zenith Bank’s tills over the period include: the CBN Commercial Agriculture Credit Scheme Loan, Real Sector Support Facility, Non-Oil Export Stimulation, Facility, and Excess Crude Loan Facility Deposit. Others are: CBN MSMEDF Deposit, FGN SSB Intervention Fund, and CBN/ Bank of Industry Power & Aviation Intervention Funds.
Intervention funds are meant to support certain sectors of the economy with single-digit finance in order to enable them to compete effectively with peers. Interest rates for such funds range from 5 to 9 percent. 
Zenith Bank is managed by Mr Ebenezer Onyeagwu, who is also its chief executive officer.
FG fund, Excess Crude Loan top chart
Of the N126.917 billion left in the Federal Government Sugar Sweetened Beverage (SSB) Intervention Fund in December 2022, only N1.78 billion was granted to the beverage firms by the bank between January and June 2023.
Source: Zenith Bank Second Quarter Financial Statements
For the Excess Crude Loan Facility Deposit, the bank lent only N2.48 billion out of N74.007 billion between January and June 2023. In terms of Real Sector Support Facility (RSSF), it granted only N3.61 to manufacturers and players in the productive sector out of the N32.336 billion remaining in the coffers in December 2022.
For the CBN Commercial Agriculture Credit Scheme Loan, Zenith Bank granted only N9.357 billion over the six-month period out of N32.893 billion left in the account in December 2022. With regard to the Micro, Small and Medium Enterprises Development (MSME) Fund, it lent N566 million to small businesses from the facility out of N1.349 billion remaining in the coffers in December 2022.
Manufacturers, MSMEs struggle for funds
Manufacturers, especially small-scale players, have struggled to access funds for expansion. The CBN monetary policy rate (MPR), which is the benchmark interest rate in the country, hit 18.75 percent in July 2023 from 18.5 percent in the previous month. Consequently, businesses borrow at 22 to 35 percent interest rates from deposit money banks. The rates are even higher at micro finance banks, reaching 40 percent in some and up to 60-70 percent in others, annually.
Members of the Manufacturers Association of Nigeria (MAN) borrowed from banks at an average interest rate of 24 percent in the first half of 2023, according to a document seen by Economy Post.
“The average lending rate to the manufacturing sector from commercial banks
remained high at 24 percent when compared with what was recorded in the first 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,” MAN said in its first -half 2023 Economic Review sent to Economy Post.
Owing to this, manufacturers, small businesses and other players in the economy scramble for cash, though only large enterprises have easy passage for the funds..
Manufacturers, others slam Zenith Bank
Manufacturers are angry that Zenith Bank has so much intervention fund in its tills without lending it – at a point the majority of them are seeking cheap funds for expansion.
“It is unfortunate that a bank will sit on billions of naira intervention funds when those who need to put them to productive use borrow at 20-30 percent,” said an Enugu State-based manufacturer, Mr Charles Ugwuebo.
“Who are you keeping the money for? We cannot experience growth with the poor attitude of banks to intervention funds,” he said.
Former Chairman of SME Group at Lagos Chamber of Commerce and Industry, Mr Jon Tudy Kachikwu, who is also a food processor, said banks were not ready for business in Africa’s most populous nation.
“They are lending the money to themselves,” Kachikwu claimed. “Another one is that they invest it and take the interest. Nigerian banks are simply traders. I have no business with them . When I need money, I go to my American banks and get loans at 6.9 percent,” he added.
An entrepreneur and chief executive of Polyguard Investment Limited, Mr Pat Odiegwu, dismissed the Nigerian banking industry as an unserious sector.
“Nigerian banks are not interested in lending to businesses because they do not understand some pf them. If you do not understand a sector and cannot give out intervention funds, simply do your due diligence. Take experts there and let them explain things to you.
“But banks here are just helping themselves but refusing to give money to those who need it,” he noted.
Experts knock banks for being “mere traders”
Experts believe that Nigeria would never develop when banks were merely traders rather than critical agents of development.
An Abuja-based economist, Dr Bola Adewale, said banks were merely trading with the intervention funds and preferred to make profits than have the country develop.
“This was not the vision of those who did bank consolidation many years ago. We wanted a banking system that would aid growth and development, not a system that will muscle out critical businesses in the economy,” she said.
Adewale said banks the people had lost confidence in banks because its regulator was failing in its responsibilities.
“If the CBN were serious, it would sanction banks that were not lending. But it looks like they are birds of a feather,” he added.
A financial expert, Dr Mary James, said that banks were afraid of lending because of their bad experiences with customers. She, however, said this was not a tenable excuse for refusing to put money into the hands of those who needed it.
“It is important for us to review the entire financial system. Banks are on their own when a debtor refuses to pay. So, they are careful with whom they grant the loans. Times are hard and default could be high, but banks must lend. They are not properly doing their due diligence, which is why they are not lending,” she added.
Zenith Bank fails to respond
Head of Corporate Affairs at Zenith Bank, Mr Ayoola Kusimo, did not respond to text and WhatsApp messages sent to him for a response on why the bank lent only 7 percent of the N311 billion intervention funds to those it was meant to serve.
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