$3.4 Billion IMF COVID-19 Loan Diversion in Nigeria: ASCAB Demands Investigation

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1 month ago

By DAYO ADESULU

Investigation into IMF COVID-19 Loan Diversion

Human Rights Group Alleges Criminal Diversion of $3.4 Billion IMF COVID-19 Loan Relief Funds

The Alliance on Surviving COVID-19 and Beyond (ASCAB) has called for an immediate and thorough investigation into IMF COVID-19 loan diversion involving the Federal Government of Nigeria. The group, led by renowned human rights lawyer Femi Falana (SAN), is demanding that anti-corruption agencies and international financial bodies take swift action over the alleged mismanagement of the $3.4 billion IMF COVID-19 loan.

The loan, received under the IMF’s Rapid Financing Instrument (RFI) in 2020, was intended to address the devastating economic and healthcare challenges caused by the pandemic. However, recent revelations suggest that a large portion of the funds may have been diverted, reclassified, or misappropriated in clear violation of the IMF’s transparency conditions.

IMF Confirms Loan Repayment, But Questions Remain on Utilization

In April 2024, the International Monetary Fund (IMF) confirmed that Nigeria had fully repaid the $3.4 billion COVID-19 loan. However, the country is still responsible for additional charges amounting to SDR 125.99 million, which is about N275.28 billion at the current exchange rate. These include net charges, interest, and administrative fees.

Despite settling the debt, questions remain unanswered about how the funds were managed. According to ASCAB, the absence of accountability and proper oversight signals a serious breach of public trust and international finance protocols.

Auditor-General Report Reveals Shocking Irregularities

A damning audit report from the Office of the Auditor-General of the Federation, released in January 2024, exposed multiple financial irregularities related to the IMF loan. The report states that:

On April 30, 2020, the Central Bank of Nigeria (CBN) transferred $2.4 billion from the IMF COVID-19 loan to its account at the Federal Reserve Bank of New York.
The remaining funds were moved to the CBN’s account at the Bank of China in Shanghai.
By June 1, 2020, the New York funds had been shifted to the Bank for International Settlements (BIS) for short-term investment purposes.
Similarly, the funds in China were relocated to the Industrial and Commercial Bank of China (ICBC).

Shockingly, these transfers were not supported by any documentation from the Federal Government or CBN’s Investment Committee. The funds were then reclassified as external reserves, which violates the emergency nature of the IMF loan.

Monetization of Funds Raises Further Questions

On August 7, 2020, the Federal Ministry of Finance requested that $700 million be monetized to support the national budget. One week later, the CBN approved a debit of N265.65 billion, using an inflated exchange rate of N379.5/$ instead of the official N360.5/$.

This amount was distributed across three different accounts:

N252 billion went to the COVID-19 Public Sector Account,
N13.3 billion to the Forex Equalisation Account,
N350 million to the Exchange Commission Account.

In addition, a 2% commission was deducted from this transaction, despite the funds being classified as Federal Government property. Meanwhile, an unmonetized balance of $2.7 billion, roughly N1.02 trillion, remains unaccounted for.

ASCAB Urges EFCC, ICPC, and IMF to Take Action

ASCAB has strongly condemned the failure of the National Assembly to act on the audit findings. The coalition argues that the silence from lawmakers represents a deliberate cover-up of financial mismanagement, violating Section 85(5) of the Nigerian Constitution.

The group has called on the Economic and Financial Crimes Commission (EFCC) and the Independent Corrupt Practices and Other Related Offences Commission (ICPC) to immediately commence a full-scale investigation into IMF COVID-19 loan diversion.

Furthermore, ASCAB has asked the IMF Board to conduct its own investigation and suspend the collection of the SDR 125.99 million charges until the matter is resolved.

“We call on the IMF Board to probe the deliberate refusal of its Management to ensure that the emergency funds were used for their intended purposes,” ASCAB’s statement reads.

Nigeria Owes Citizens Full Transparency and Accountability

According to Femi Falana, Nigerian taxpayers should not be burdened with repayment costs for a loan that was not used as intended. He noted that institutions like the IMF must enforce strict compliance and accountability when disbursing funds, especially during a global crisis.

ASCAB insists that only a full and public investigation into IMF COVID-19 loan diversion will restore confidence in Nigeria’s public financial management.

Final Thoughts

The IMF COVID-19 loan was meant to provide life-saving relief during an unprecedented health crisis. Instead, it appears to have been mishandled in a manner that threatens both Nigeria’s reputation and its economic stability.

With over N275 billion in outstanding charges and billions of naira unaccounted for, urgent steps are needed. If Nigeria fails to act, it risks damaging its standing with global financial institutions and betraying the very citizens it aimed to protect.

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