COVID-19 Loans: House of Reps urges flexible repayment plan

The House of Representatives has directed the Central Bank of Nigeria (CBN), NIRSAL, and SMEDAN to restructure the repayment system for recovery of the COVID-19 loans from Nigerians who took the facility.

It also wants the interest rates reduced, as well as extension of the repayment time, and make the process more flexible so that small businesses do not collapse.

The House made the call recently following public outcry by Nigerians who complained that their accounts were being emptied.

The lawmakers also urged the Ministry of Finance to suspend all forceful recoveries and even consider waiving the loans for low-income earners and small business owners.

According to Rep. Saidu Abdullahi who moved the motion, many people genuinely cannot repay these loans because of the current economic hardship.

Following complaints by people who took out loans that their accounts were being emptied, some stakeholders have urged the CBN and NIRSAL Microfinance Bank (NMFB) to furnish Nigerians with the records of the COVID-19 loans.

They made the call in an interview with the News Agency of Nigeria (NAN) on Tuesday in Abuja.

NAN reports that in 2020, the Federal Government had established a Targeted Credit Facility (TCF) to cushion the economic effect of the COVID-19 pandemic on Nigerians and small businesses.

The stakeholders claimed that the total amount given out in loans and the amount recovered had been shrouded in secrecy.

Findings revealed that the TCF was created by the CBN and disbursed by NMFB, which is affiliated to the apex bank.

Available records show that a total sum of about N419.42 billion was disbursed to 792,936 beneficiaries, consisting of households and small businesses.

Some beneficiaries of the loans had, however, complained that their bank savings were being eroded without authorisation.

According to an economist, Bola Adeola, COVID-19 loan recovery statistics are still unavailable.

Adeola said that many beneficiaries defaulted in the repayment of the loans.

“Auto-debits only began recently for COVID-19 loans. Accountability remains a myth,” he said.

A policy analyst, Mr Seidu Yusuf, said that many people just noticed money being taken from their bank accounts by NFMB, and it had caused a lot of confusion.

“Most of these deductions are for COVID‑19 intervention loans under the TCF.

“Some people thought this money is a free grant, but it is actually a loan that must be paid back.

“If the loan is not fully repaid on time, NIRSAL can automatically take money from any account linked to your BVN.”

Emannuel Owen, a banker, said that many people collected the COVID-19 and NIRSAL loans without having real plans for the money.

According to him, they spent it anyhow, without thinking about repayment. Now, for years, their accounts have been debited, and they are angry and frustrated.

An official of the CBN, who spoke on the condition of anonymity, said that NIRSAL was in charge of the disbursement and recovery of the loans.

According to him, it is difficult to know exactly how much has been recovered, but they are recovering.

He said that 62 per cent of the N419 billion total sum that was disbursed under the TFC was underperforming,

He said that ₦ 41 billion had been repaid, while ₦261 billion remains in default as non-performing loans.

“N116 billion is still in the system, being paid or restructured.

“The only thing they need is your BVN to enable them to access all your bank accounts. A lot of the beneficiaries thought that they would not pay back the loans,” he said. (NAN)