Guaranty Trust Bank (GTBank) has taken legal action against 60 top executives from 13 commercial banks over a lingering N17 billion debt involving Afex Commodity Exchange and the Anchor Borrowers Programme.
The executives, including chairmen, CEOs, directors, and company secretaries, face contempt proceedings for allegedly failing to enforce a No-Debit Order on Afex’s accounts.
The Federal High Court in Lagos, presided by Justice C. J. Aneke, had ordered these executives, along with the liquidator of Heritage Bank (Nigeria Deposit Insurance Corporation), to be jailed for not complying with its May 27, 2024 ruling. A notice published in national newspapers, including The PUNCH, detailed the court’s order to serve Form 48 (Notice of Consequences of Disobedience to Order of Court) to the cited parties.
The banks involved include Access Bank, Citibank, Jaiz Bank, Union Bank, Fidelity Bank, First Bank of Nigeria, First City Monument Bank, NDIC (as liquidator for Heritage Bank), Polaris Bank, Stanbic IBTC Bank, Standard Chartered Bank, Taj Bank, United Bank for Africa, and Zenith Bank.
In its ruling, the court directed 20 banks to transfer funds from Afex’s accounts to GTBank until the N17.81 billion debt is repaid. This sum includes N15.77 billion in outstanding debt and N2.04 billion in recovery costs and expenses. Additionally, the court allowed GTBank to take over 16 warehouses owned by Afex and sell the commodities stored there.
Afex had borrowed the Anchor Borrowers Programme Loan from GTBank to finance smallholder farmers. Despite an extension, Afex failed to fully repay the loan. According to a statement from Afex, they have repaid about 90% of the loan, but economic challenges have hindered full repayment.
“Over 800,000 hectares of farmland were financed through the programme, but significant economic headwinds, including the Naira redesign policy, severely impacted the productive capacity and market participation of the smallholder farmers,” Afex explained. “This resulted in less than 40% repayment from farmers, down from our previous 90% repayment rates.”
Afex has called on the Central Bank of Nigeria (CBN) to activate the collateral guarantee clause of the Anchor Borrowers Programme to cover 70% of the outstanding loan. The CBN designed the programme to link smallholder farmers with processors, increasing agricultural output and stabilizing food prices.
As of 2022, around 4.8 million people had benefited from the Anchor Borrowers Programme, with the CBN releasing N1.079 trillion, of which over N500 billion is due for repayment. The programme has since been discontinued as the CBN shifts focus to its core duties of price and monetary stability.