States Borrow N204.93bn From GTBank, Access, Zenith Bank In 2020
…As Access, Zenith disburse N194.5bn to state workers
The trio of Guaranty Trust Bank (GTBank), Access Bank and Zenith Bank Plc issued N204.93 billion to state governments in 2020 to augment their earnings for the execution of developmental projects to better their economies.
With the increasing economic challenges, the banks are a destination for credits by the government although the borrowing in 2020 was lower to the N210.72 accessed in 2019.
These are outstanding balance 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 comes 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 N13.8 billion outstanding facility from N13.86 billion in 2019, while Access Bank reported N109.19 billion outstanding loans compared to N113.6 billion reported in 2019.
GTBank in its 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 cent 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 percent interest rate.”
However, our correspondent gathered that Access Bank and Zenith Bank in 2020 disbursed N194.5billion to state workers as against N192.9billion in 2019.
While Access Bank disbursed N60.37billion as salary to state government workers in 2020 from N62.04billion in 2019, Zenith Bank reported N134.12billion in 2020 from N135.9billion reported in 2019.
Access Bank explained that “The amount of N60,370,978,502 represents the outstanding balance on the state salary bailout facilities granted to the bank by the CBN for onward disbursements to state governments for payments of salary of workers of the states.
“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.”
Zenith Bank also said, “The Salary Bailout Scheme was approved by the Federal Government to assist State Governments in the settlement of outstanding salaries owed their workers.
“Funds are disbursed to Banks nominated by beneficiary States at 2% for onlending to the beneficiary states at 9%. The loans have a tenor of 20 years.
“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.”
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