NERFUND to Prosecute Customers over N17.2bn Bad Loans

The acting Managing Director, National Economic Reconstruction Fund (NERFUND), Dr. Ezekiel Oseni wednesday disclosed plan to engage the Independent Corrupt Practices and Other Related Offences Commission (ICPC) and Economic and Financial Crimes(EFCC) to recover over N17.2billion non-performing loans (NPLs), which were advances to customers between 2013 and 2015.

He said about 1, 143 projects, mainly micro small and medium enterprises (MSMEs) benefitted from its financing within the period but failed to honour their repayment plans.

Oseni gave the hint in Abuja on the sidelines of a meeting with a delegation from the African Rural and Agricultural Credit Association(AFRACA), led by its Secretary General, Mr. Saleh Gasua.
Until Oseni’s appointment last month, NERFUND, which was set up to provide needed medium-to long-term financing to Micro, Small and Medium Scale Industrial Enterprises, had been in turmoil as staff protested alleged corruption and mismanagement.

According to insider sources, part of the issues that triggered the tension in the office is the huge loan portfolio of the bank, which had rendered it incapacitated.

Oseni, however, said the bank had launched an aggressive loan recovery drive, vowing to bring loan defaulters to book.

He said some of the strategies would be to identify and engage the various customers to work out repayment options and sales of assets of those whose projects are on ground but unable to pay back.

The NERFUND acting MD also said as part of the moves to encourage repayment, the bank was ready to grant concession on the loan interest to certain categories of customers.

He, however threatened to drag some of the customers found to have either invested the loan granted to them on projects not listed in their loan applications and those who out rightly diverted the fund to the ICPC and EFCC.

He said: “Many of the loans that constitute the N17.2 billion loans have been hanging for more than 10 years. What we are doing presently is to get the customers to repay. We have reached out to some of them.

“This one month that I have resumed, a lot have been coming in to make some payment to us. I expect the rate of recovery to be higher than what we are experiencing right now. What we are planning to do is to give them a little more time to enable them to respond.

“But for those that think they don’t have obligation to pay, there are a lot of strategies that we are going to embark upon to recover the money. For those whose projects are on ground, but don’t have the means to pay, we will dispose their assets.

“We are going through all the legal processes to enable us sell the assets without violating the legal agreement we signed with them. Those we also need to take to the law enforcement agencies like ICPC and EFCC to help us to collect the money, especially where we discover that there were diversions, we will also do it.”

On why the DFI had such a huge NPL portfolio, Oseni said NERFUND was not originally set up to engage in direct lending and as such lacked the expertise to do the business.
He said findings had revealed that the ratio of non-performing loans was high because in many instances, no proper appraisals were conducted before some of the loans were granted to customers.

However, Gashua said the organisation was in the country to discuss with its various member institutions on how to strike a synergy for the provision of sustainable financial services to the rural and agricultural communities within the continent.

He noted that that all hands must be on the deck to address the present economic challenges bedeviling the nation, adding investment in agriculture was key to the country’s economic rebirth.

by James Emejo in Abuja/Thisday