Nigeria to settle out of court on local debt recovery

2019 election

There are indications that Nigeria may settle out of court in its case against the local banks over a USD793 million due to the state, and that it was seeking an out-of-court settlement instead.

Meanwhile the seven banks involved have said they either do not owe the government money or have paid what is due, Reuters reports.

Commercial banks in Nigeria collect grants, taxes, fees and tariffs on behalf of the government which they send to a single treasury account with the central bank in line with a policy introduced in 2015 aimed at curbing corruption.

In July, a court ordered the banks to transfer the aforementioned amount due to the government immediately and accused the lenders of withholding funds collected on behalf of the state.

“The government has decided to withdraw the case,” Lawyer Yemi Akinseye-George told the court. While most of the lenders have reiterated that they have remitted all funds to the government.

Three of the lenders; United Bank for Africa, Fidelity Bank and Sterling Bank, told Reuters last month that they were not owing government.

Speaking on behalf of another lender (Keystone Bank), Babatunde Ogungbamila, told the court that the government ought not to have gone to court over the matter and asked that a cost of 20 million naira be imposed on government. Other lenders also followed.

State-owned Nigerian National Petroleum Company has said the central bank was supervising the payment of funds to the government totalling USD231.8 million from Diamond Bank , Skye Bank and Keystone Bank, remittances due to the oil company from the lenders.

Severe dollar shortages have been a hallmark of Nigeria’s recession, now in its second year. The downturn was brought on by lower prices for oil, the government’s main source of income, mostly paid for in hard cash.

Recalled that President Muhammadu Buhari has ordered the merger of state accounts into a single treasury account at the central bank to reduce graft and a practice whereby the government would borrow back its own funds from lenders, paying interest to them.

Most of the funds lenders collect on behalf of the government are in hard currency which on past occasions have sometimes been held back for their own operations.