CBN Faces Backlash as Beneficiaries Voice Concerns Over COVID-19 Loan Recovery

The Central Bank of Nigeria (CBN) has stirred controversy as it initiates efforts to recover loans issued to Nigerians under the Targeted Credit Facilities (TCF) program in 2020, aimed at mitigating the economic impact of COVID-19. Beneficiaries of the program have raised objections regarding the manner in which the recovery process is unfolding.

Fatimah Alli, one of the beneficiaries, expressed her distress, stating that the sudden move to recover her N500,000 loan has exacerbated her financial difficulties. She recollected, “I received a loan of N500,000 in 2020 to alleviate the economic impact of COVID-19. At that time, we were assured that repayment would not be required. Recently, all the funds in my bank accounts were seized by the CBN as part of their loan recovery initiative.”

Another recipient, Abbas Sule, voiced his frustration over what he sees as arbitrary loan deductions from his bank account. He disclosed, “When I was granted the loan facility in 2020, the bank official who processed it through NIRSAL Microfinance Bank (NMFB) received a commission of N50,000, and I received N450,000. Now, they are demanding that I repay N500,000. That doesn’t seem fair.”

Simultaneously, concerns are mounting over the limited success of loan recovery efforts within the Anchor Borrowers Programme (ABP), which was established by the CBN in November 2015 to provide farm input and cash support to smallholder farmers. The program aimed to bolster food production, stabilize input supplies for agro-processors, and address the country’s negative food balance of payments.

According to the International Monetary Fund (IMF), as of 2022, a staggering 76 percent of loans extended to beneficiaries remain unpaid. The IMF attributed this lackluster performance to challenges in reaching targeted farmers effectively. It also noted that despite the CBN’s provision allowing farmers to repay in cash or with produce of equal value under the ABP, repayments have remained significantly below expectations.

The situation surrounding the recovery of COVID-19 loans and the ABP highlights the complexity of managing financial relief programs during challenging economic times, raising pertinent questions about the effectiveness of such initiatives in the Nigerian context.