On-lending: GTBank, 2 others disburse N204.93bn to state govts in 2020
By Kayode Tokede
With increasing economy challenges, the likes of Guaranty Trust bank Plc (GTBank), Access Bank Plc and Zenith Bank Plc through the Central Bank of Nigeria (CBN) borrowed some state governments N204.93billion in 2020 as against N210.72 billion reported in 2019.
These are outstanding balances on the concessionary loans granted by the CBN to State Governments for the execution of developmental and infrastructure projects and are payable on a monthly basis from the Federal Account Allocation Committee (FAAC) allocation of these States.
Analysts have expressed that these loans by CBN to state government come at a single-digit interest rate, maintaining that some state government have not effectively utilized the borrowed funds.
As stated in GTBank’s 2020 financial statement, some state governments have N13.8billion outstanding facility from N13.86billion in 2019, while Access Bank reported N109.19 billion outstanding loans compared to N113.6 billion reported in 2019.
GTBank in its latest 2020 result and accounts explained that, “The amount of N13,812,844,000 (December 2019: N13,860,702,000) represents the outstanding balance on the concessionary loans granted by the Central Bank of Nigeria to State Governments for the execution of developmental and infrastructure projects.
“The facility is secured by the balance due to State Governments from the Excess Crude Account. The facility is priced at 2% p.a payable on a monthly basis.
“The loan is granted to the States at 9% p.a inclusive of all charges. The principal is repayable monthly from the Federal Account Allocation Committee (FAAC) allocation of those States as a first line charge upon the issuance of an Irrevocable Standing Payment Order(ISPO) by those States. The tenor of ‘the facility is 20 years.”
Also, Access Bank said, “The amount of N109,185,235,757 represents the outstanding balance on the excess crude account loans granted to the bank by the Central Bank of Nigeria for onward disbursements to state governments.
“The facility has a tenor of 20 years with a 2% interest payable to the CBN. The Bank is under obligation to on-lend to the states at an all-in interest rate of 9% per annum. From this creditor, the bank has nil undrawn balance as at 31 December 2020.”
In addition, Zenith bank, said it disbursed N81.9 billion in 2020 from N83.3billion in 2019,
The said, “Excess Crude Account (ECA) facilities are loans of N10 billion to each State with a tenor of 10-years priced at 9% per annum interest rate to the beneficiaries.
“Repayments are deducted at source, by the Accountant General of the Federation, as a first line charge against each beneficiary state’s monthly statutory allocation.
“This facility is not secured. The fund is disbursed to the bank at 2% interest rate.”
