CBN 220BN MSMEDF INITIATIVE: OF SUSPICIOUS DISBURSEMENTS AND DENIAL OF INFORMATION UNDER THE FOI ACT (PART 1)
While working with a first generation commercial bank we had a clear policy on lending to political office holders whose tenures were nearing an end, this was largely due to previous experiences where the next officials who take office query such loan advances as it often leaves the incoming administration not only an empty treasure but also due obligations to be repaid.
It is also a Nigerian truism that new administrations hardly ever want to continue projects initiated by previous administrations, as such, lenders and other categories of investors rather would wait for the next government that would have the executive powers to ensure a smooth project initiation and implementation.
I have taken the pain to start my piece with the analogy above to help put in perspective the suspicious nature of the disbursements CBN officials made out to certain State Governments/FCTA last year, this piece is essentially going to discuss the disbursements while the coming series will discuss the infractions on the guideline of the initiative in disbursing to the State Governments/ FCTA.
The 220bn MSMEDF initiative had its guideline amended in July 2014 to allow for State Governments/FCTA to access a maximum of 2bn each (rather funny decision as it places Lagos state in the same strata with Taraba state) for on-lending to MSMEs in the individual states and as at August 2015, twenty four (24) states had accessed a total of thirty nine billon, ninety eight million, one hundred and thirty thousand (N39,098.13), of greater concern to this piece is the following disbursements;
- ZAMFARA STATE MARCH 27TH 2015 1,964.50BN
- DELTA STATE MARCH 19TH 2015 2BN
- ABIA STATE MARCH 18TH 2015 2BN
- AKWA IBOM STATE MARCH 10TH 2015 2BN
- CROSS RIVER STATE ARPIL 10TH 2015 1.5BN
- JIGAWA STATE MARCH 19TH 2015 2BN
- KADUNA STATE MARCH 15TH 2015 1BN
- FCTA 17TH MARCH 2015 2BN
- KOGI STATE 17TH MARCH 2015 2BN
- PLATEAU STATE MARCH 17TH 2015 2BN
Besides Zamfara, Kogi and Kaduna states, all the other governors in the list above where due to vacate office on the 29th of May 2015, just about two months or less for some from when CBN officials went ahead to disburse funds to them, in the name of on-lending to MSMEs in their states.
The State Governors having run short of funds to leave offices with, quickly remembered they were still entitled to a certain 2bn each from the CBN for MSMEs and went ahead to catch in on that and our CBN officials who amongst several other responsibilities are supposed to be the watchdog of the banking system and help stop financial fraud could not smell a lassa –like infectious rat on the request of the governors who were already packing to leave the various government houses and ask them to allow the incoming governors/ FCTA minister access the fund after May 29 2015, went ahead to disburse the funds to Governors/FCT Minister who simply added it to their parting share of our national cake, or maybe the CBN officials knew it was not right but looked the other way.
As for Kogi and Kaduna states, a rational mind would have done an assessment of the political events playing out in the states, and “keep processing the application” until after May 29th 2015, time at which it would have been clear who would continue to be or elected Governors of the states will be, rather, the CBN officials graciously made 3bn available to both Governors for other uses except for MSMEs in both states.
The case of Kogi is rather more pathetic, as a political economy post-graduate student I was taught amongst several things that nations/individuals relate with each other based on how they rate each other. The stories that kept emanating out of the state few months into the administration of the then Governor, Capt Wada, were a continuous stream of tales of incompetence, funds mismanagement and a host of other worrisome accusations and yet CBN officials obliged him a 2bn MSME development fund for which as at today neither the CBN officials nor the State Government can point to individuals or groups that benefitted from the funds disbursement.
As suspicious as the disbursement to these State Governments/FCTA administration are, it is even more worrisome and sad to note that FOI request made out on the 2nd July 2015 and 22nd SEPTMEBER 2015 have received partial responses from the bank officials while the present FCTA administration has promised to probe that which was disbursed to the it.
The CBN officials having stalled our FOI requests for over six (6) months funnily wrote to decline our request on the grounds that we do not have rights to know how the funds were disbursed by the State Governments, even though the guideline of the initiative mandates the bank to periodically monitor projects funded by it, authenticate applications as forwarded to it by the states on behalf of MSMEs and do a periodic publication of its findings. The courts will have to help us out on this.
Our findings indicated that CBN officials did not only contravene the guidelines in the disbursing models it adopted as against that contained in the guideline, it also helped in ensuring that whilst we have a 220bn MSMEDF initiative in principle, in reality what obtained was a 2bn “manna from the glass house to willing and game playing Governors”.
I will be publishing the part 2 of this series next week and focus will be on the direct infractions on the guidelines of the funds in disbursing to the State Governors. Let me also remember to add that an FOI request to the almighty CBN Governor requesting for details of all funding initiatives targeting MSMEs since 1999 has been ignored even after a reminder was written and delivered.
Now if you want to also know how much CBN officials are entitled to in management expenses for the organisation of this charade called 220bn MSMEDF do come back next week and perhaps we will also see why the FOI ACT has to be amended to state that any government officials that refuses to release information and brings upon his/her MDA a legal action should personally foot the bill of the legal team representing his/her MDA.
Written by @okekecc @advocacy_msme