Why Zenith/Access Bank Accounts Were Opened for Kogi Civil Servants

Following queries and concerns raised that new salary accounts have been opened for Kogi State civil servants in Access and Zenith Banks and account details communicated to them, rather than use their existing salary accounts in various banks, Governor Yahaya Bello has offered some insights into that development and the rationale behind it.

At a forum on Thursday where the issue came up, the governor explained that the latter day bailout funds received by state governments are actually the end product of the federal government standing surety for state governments, enabling them to approach deposit money banks for facilities.

In other words, as against the generally held impression that the federal government has always doled out these funds from its coffers, what happened in the case of Kogi State is that the federal government essentially provided a guarantee for the loan facility to would-be lenders, in favour of the state government.

Due to the prevailing economic situation, cash reserves of commercial banks domiciled with the Central Bank of Nigeria are currently competing for so many pressing needs simultaneously, making it increasingly difficult for the commercial banks to finance loan facilities, especially long-term ones.

Access and Zenith Banks were however able to step up to the plate when Kogi State approached them. They made the first tranche of the state’s bailout funds available, but on one small condition. That the funds remain domiciled in their banks. If you ask me, and without giving it too much thought, it does make perfect business sense.

These banks offer essentially homogeneous services, especially in this case where we are talking salary accounts. It would have been odd were Access and Zenith to be so liberal as to allow other banks benefit from an exclusive market they have basically created. So, rather than make these funds available to the state government to pay workers through other banks, why not internalise the entire process and start reaping accruable benefits from the get go?

This explanation is very necessary as I have come across many wild allegations and insinuations that accounts being opened are for unethical purposes. Given the foregoing, any insinuations and speculations about shady, underhand dealings with regards to the disbursement of these bailout funds are completely unfounded.

I admit that this situation where erroneous notions are already making the rounds should have been preempted. However, I believe it is not too late to correct the wrong impression some of us have held on this issue. Another persistent misconception that also needs correcting concerns the actual nature of the bailout funds itself, as not a few of us still wrongly assume it is a largesse.

Permit me to quickly reiterate that these bailout funds are loan facilities. They are debts structured to be paid back over an extended period, and which will certainly be inherited by the generation coming after us. Please, they are not grants. This explains why state governments have had to first apply for the funds. Individual state governments assess their needs, then make a request to the federal government which is scrutinised.

This process is a work in progress, even as government remains committed to ensuring that all legitimate workers get what is due them. Any complaints and observations should be transmitted through appropriate official channels, and such will be duly looked into so no one is unfairly left behind.