Anchor Borrowers: Court quashes N374 billion claims against Keystone Bank by Ginger Farmers  

The suit, which revolved around the Anchor Borrowers’ Programme (ABP), was dismissed due to jurisdictional issues.

Justice Obiora Egwuatu struck out the association’s suit, which represented 31,309 farmers.

The claims against Keystone Bank ranged from the non-disbursement of N8,679,289,368.92 to N335,437,200,000 in entitlement claims and N30 billion as general damages for the alleged breach of the banker-customer relationship, according to Naijaonpoint’ exclusive review of the court documents.

Naijaonpoint reports that the Anchor Borrowers’ Programme (ABP) of the Central Bank of Nigeria (CBN),  established on November 17, 2015, to create economic linkages between smallholder farmers and anchor companies, has been facing significant repayment issues from beneficiaries, leading to a number of litigations.

“The CBN released the approved loan sum of N8,679,289,368.92 to Keystone Bank for onward disbursement to the plaintiffs within 10 working days in March 2020. However, the commercial bank only notified the plaintiffs on July 29, 2020,” the plaintiffs’ lawyer, Eko Ejembi Eko, SAN, submitted.

Some of the reliefs sought include:  

“A declaration that the plaintiffs were entitled to the prompt release of the agricultural loan facility granted to them by the CBN under the Anchor Borrowers Scheme.”  

“A declaration that Keystone Bank converted for its own use the sum of N8,679,289,368.92 it received from the CBN for the sole and exclusive use of the plaintiffs under the Anchor Borrowers Programme, thereby depriving them of access to the funds.”  

“Effectively, it is commercial banks such as Keystone Bank that act as the real and ultimate lenders to participating farmers under the Anchor Borrowers Programme,” he submitted in court documents exclusively seen by Naijaonpoint.

“The offer letter dated September 2, 2020, for the loan of N8,679,289,368.92, which was accepted by the plaintiffs, grants Keystone Bank the prerogative to withhold the disbursement of the loan and, upon demand by the Central Bank of Nigeria, to repatriate the loan amount to the CBN forthwith,” Ajala argued.

Ajala further stated that on November 11, 2020, the CBN requested the repatriation of the loan, and Keystone Bank swiftly complied.

“Upon receipt of this letter, the CBN, in line with its role in coordinating the programme and in accordance with its contractual obligations, accepted the repatriation of the loan sum by Keystone Bank,” Hassan stated.

“It is a precondition that must be complied with. Any action commenced in breach of this requirement would be incompetent,” the judge held.

The judge stressed that while the requirement of a pre-action notice can be waived, Keystone Bank had insisted on being served and raised an objection in time.

He held that the plaintiffs’ failure to issue a pre-action notice makes their suit incompetent.

He held that the plaintiffs’ failure to issue a pre-action notice makes their suit incompetent.

“Where a court has declined jurisdiction, it also lacks the power to take any further action. A court without jurisdiction cannot make further orders or take any steps beyond declaring its lack of jurisdiction. Any action taken thereafter is a nullity,” he stated.

Consequently, the judge struck out the suit against Keystone Bank for lack of jurisdiction.

Naijaonpoint reports that as of late 2024, the ABP had disbursed a total of N1.121 trillion, with only N670.47 billion recovered in principal repayments and N5.79 billion in interest payments.

This left an outstanding amount of N450.90 billion at the time, with an additional N354.5 billion marked as overdue, leading to a portfolio default rate of 31.6%.

The ABP shares the risk between the CBN and the Participating Financial Institutions (PFIs), with each bearing 50% of the exposure.

With over 4.5 million beneficiaries, the programme remains in recovery mode, with relevant authorities pursuing legal action and other measures to address repayment challenges.

The CBN Governor, Yemi Cardoso, has repeatedly criticized intervention funds implemented under the leadership of his predecessor, Godwin Emefiele, arguing that they were not properly executed.

The verdict underscores the power of the courts to intervene in loan disputes between financial institutions and aggrieved parties.

For parties in a contractual dispute, serving a pre-action notice is a crucial requirement to ensure that a case is deemed competent and can be heard by the court.