Guaranty Trust Bank (GTBank) has filed a lawsuit against 60 senior executives from 13 different banks over a lingering N17 billion debt tied to the Anchor Borrowers Programme loan. The court case, between GTBank and Afex Commodity Exchange, involves chairmen, chief executive officers, directors, and company secretaries from the banks in question.
These executives are being accused of contempt for allegedly not enforcing a No-Debit Order on Afex Commodity Exchange’s accounts. This order was meant to freeze Afex’s accounts to facilitate debt recovery. The case, registered as FHC/L/CS/911/2024, is being heard at the Federal High Court in Lagos under Justice CJ Aneke.
The court’s ruling on May 27, 2024, ordered the bank officials, including the liquidator of Heritage Bank (Nigeria Deposit Insurance Corporation), to be jailed for not complying with the court’s directive. This ruling required 20 banks to transfer any funds in Afex’s accounts to GTBank until the full debt of N17.81 billion is repaid.
Additionally, the court allowed GTBank to take control of 16 Afex warehouses located across seven states and sell the commodities stored in them, which were bought using the loan from the Central Bank of Nigeria’s Anchor Borrowers Programme.
Previously, contempt charges had been filed against several Afex executives, including Ayodele Balogun and Jendayi Fraaser, for failing to repay the loan. Afex had obtained the loan to finance smallholder farmers under the CBN’s programme but failed to meet the repayment schedule, even after an extension.
In a statement, Afex claimed that about 90% of the loan had been repaid, attributing the delay in full repayment to economic challenges faced by the farmers.
Afex explained that despite their best efforts, including paying out of their own funds, the farmers struggled due to the economic impact of the Naira redesign policy and other macroeconomic issues.
These financial hurdles led to a significant drop in repayment rates from farmers, which affected Afex’s ability to repay the full loan by the end of Q1 2023, even after a six-month extension. The company has called on the Central Bank of Nigeria to activate the collateral guarantee clause in the Anchor Borrowers Programme, which covers up to 70% of the loan risk.
The CBN initially launched the Anchor Borrowers Programme in 2015 to connect smallholder farmers with processors, increase agricultural output, and stabilize food prices. By 2022, the programme had benefited 4.8 million people, with over N1 trillion disbursed. However, the CBN has recently discontinued the programme to focus on its primary roles of ensuring price and monetary stability.