Nigerians Refuse to Pay N261 Billion COVID-19 Loans Owed to CBN

• Some Nigerians who collected loans under the targeted credit facility (TCF) of the CBN have defaulted on repayment
• According to the apex bank's data, only half of the total amount of loans given out has been collected
• The CBN also disclosed that the facility has generated 1,585,872 direct and indirect employment opportunities

Legit.ng journalist Victor Enengedi has over a decade's experience covering Energy, MSMEs, Technology and the stock market.

A significant portion of the funds disbursed through the targeted credit facility (TCF) by the Central Bank of Nigeria (CBN) and NIRSAL Microfinance Bank (NMfB) remains unpaid.

Out of the total amount of N419.42 billion allocated, Nigerian beneficiaries have yet to repay N261.07 billion.

Launched in April 2020, the TCF was designed to mitigate the adverse economic impact of the COVID-19 pandemic on both households and small to medium-sized enterprises (SMEs).

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However, Legit.ng had reported that the CBN, in partnership with (NMfB), has begun recovering their loans from defaulting Nigerians.

Loans generated thousands of jobs

As per a statement from the CBN, the facility has generated 1,585,872 direct and indirect employment opportunities, making a notable contribution to Nigeria's employment sector.

According to DailyTrust, the document further highlights that out of the total disbursement of N419.42 billion, principal repayments total approximately N41.39 billion, accompanied by interest repayments of around N174.60 million.

However, there remains a substantial outstanding balance of about N378.03 billion, with an overdue amount of N261.07 billion, signalling that a considerable number of beneficiaries have fallen behind on their repayment obligations.

Beneficiaries each received N2.5 million

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According to the document, recipients of the loan, each receiving N2.5 million for SME financing, are classified as 'non-performing,' suggesting difficulties or lapses in repayment.

However, one exception, Centriculture Limited, has been labelled as 'performing' due to its repayment of N1 million.

The document offers several recommendations, including integrating the intervention into the Agri-Business/Small and Medium Enterprise Investment Scheme (AgSMEIS) for improved administration and outcomes.

Additionally, it suggests crafting a well-defined exit strategy that corresponds with the outstanding balance to facilitate the smooth conclusion of the program.

In a recent development, President Bola Tinubu directed commercial banks to begin the process of recovering the loans disbursed to customers to cushion the economic impact of the coronavirus pandemic.

Difficulty in loan repayments

Speaking to Legit.ng about the general level of loan default in Nigeria, Nnamdi Azuka, managing director of B&B Manufacturing Limited said that economic realities do not make it easy for borrowers to pay back loans.

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He said:

"Despite the assistance provided by CBN loans in maintaining business operations amid challenging conditions, there's no assurance of profitability or expansion.

"Numerous elements such as energy expenses, inflation, and foreign exchange fluctuations may impact profitability and the capacity to repay loans consistently.

"Taking into account constraints such as insecurity, inflation, escalating forex rates, heightened fuel costs, and an unfavourable operational climate, CBN interventions alone may not suffice to uplift these enterprises."

Azuka added that addressing these mitigating factors is imperative for the federal government if it aims to ensure that businesses generate sufficient profits to repay CBN-provided loans.

CBN begins debiting loan defaulters' accounts

Meanwhile, Legit.ng reported that the CBN had begun debiting defaulters' accounts under its development finance intervention programmes.

The CBN's development finance director, Yusuf Yila, stated this on Wednesday, September 28, 2023, after the Monetary Policy Committee (MPC) meeting in Abuja.

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Yila said the apex bank has begun debiting its defaulters' accounts, specifically states and farmers who benefitted from its interventions.

Source: Legit.ng