The office of the auditor general of the federation has queried the Bank of Agriculture about the rising non-performing loan amounting to N75.595 billion, continuous loss-making decision amounting to N49.582 billion and non- payment of outstanding equity by shareholders (Central Bank of Nigeria and Ministry of Finance Incorporated) amounting to N16.391 billion.
This is contained in the 2019 report submitted to the clerk of the national assembly and signed by the auditor general of the federation, Mr. Adolphus Aghughu.
The report also talked about unrecoverable loan from the federal ministry of water resources amounting to N2.411 billion, non-rendition of 2019 audited financial statements to the auditor general for the federation, overdue tenure of external auditors, non-composition of governing board and high turnover of managing directors.
“Audit review of reports from risk asset management department of BOA Ltd on non-performing loans observed that the non- performing loan as at 31 December, 2019 stood at N75, 595,161,603.91,” the report added.
It further stated that practices within the bank violate the provisions of article 8.3.2 of the Regulatory and Supervisory guidelines for development finance institutions in Nigeria 2015 and article 12.3 of the Prudential Guidelines for Licensed Banks in Nigeria 2010.
It said further that the statement of comprehensive income of the bank showed a consistent loss of revenue by the bank between year ended 31 December, 2017 and 2019 amounting to about N49.582 billion over the three year period.
Furthermore, the report said the capital adequacy ratio of the bank is below the regulatory minimum of 10 per cent, which indicates the existence of material uncertainty which casts significant doubt on the Bank’s ability to continue as a going concern.
It said further that despite the approval of the President in 2001, the Ministry of Finance Incorporated paid a total of N27.7 billion in instalment over a period of 14 years, with additional N1.5 billion paid in 2018, while Central Bank of Nigeria paid N3.6 billion in 2003 having earlier paid N400 million between April 1980 and October, 1993.
It said stakeholders in the bank still have about N16.391 billion to be paid as outstanding equity in the bank, adding that the delay in paying the equity has led to inadequate capital base and difficulties in fulfilling its mandate.
On the unrecoverable loan from the federal ministry of water resources, the report said between 1981 and 1982, the federal executive council directed the BoA to disburse the sum of N5 million each to the eleven (11) river basin development authorities totaling N55 million for on-lending to farmers in their areas of jurisdiction.
The ministry also obtained various forms of loans from the bank for various projects including the Kampe and Swash dams and irrigation projects as well as the construction of middle and lower Ogun dam and irrigation projects.
The report said the federal executive council set up a committee comprising officials of the ministries of water resources, finance and BOA in 1999 to carry out reconciliation, which arrived at the total outstanding balance of N2.411 billion
It said further that the ministry was granted a waiver of N1, 043, 806, 663.00 in April 2001 and requested to pay the sum of N1,368,000,000.00 as full and final settlement but the amount had not been settled.
The report also stated that the bank failed to submit its audited report to the office of the auditor general as required by law adding that the external auditors appointed by the bank had over stayed.
It said the non- appointment of a board for the bank could lead to lack of strategic direction/guidance for the entity and absence of oversight function, while the high turnover of managing directors/chief executive officers could result in operational inefficiencies and could also threaten the going concern status of the bank.
It said between 2010 and 2020, the BoA had five MD/CEOs adding that among those appointed before 2020, only Mohammed K. Santuraki served a full tenure of four years.
On the response of the bank to the issues raised, the report said the management disclosed that it was taking advantage of the global standing instruction issued by the CBN on non-collateralised loans and hoped to recover all outstanding principal and interest upon defaulting farmers through the deductions.
The bank also said it has waiver concessions on the interest element of the loans to encourage defaulters to pay, while the bank is already prosecuting defaulting clients through various courts.
It also said there was an ongoing repositioning of the bank through a $1.2 million initial grant from the African Development Bank for the institutional strengthening and capacity building from the AfDB while the Bureau for Public Enterprises was already carrying out a project for restructuring, recapitalisation and partial privatisation of BOA.
