How Elumelu’s Heirs Holdings Borrowed N41.8bn From UBA At Far Lower Market Interest Rate

Tony Elumelu

Tony Elumelu’s Heirs Holdings got loans totalling N41.823 billion from the United Bank for Africa (UBA) at 15 percent interest rate, Economy Post has found.

Elumelu is both the chairman of  UBA and Heirs Holdings. He is also the founder of Tony Elumelu Foundation.

Findings showed that as of December 2022, Elumelu’s Heirs Holdings owed UBA N13.442 billion. However, the firm’s debt to the bank rose to N41.823 billion by June 2023. This shows that Elumelu’s Heirs Holdings borrowed N28.381 billion from UBA between January and June 2023.

Currently, the Central Bank of Nigeria (CBN)’s monetary policy rate (MPR), which is the benchmark interest rate in the economy, is 18.75 per cent, meaning that any bank lending below that is doing so at below the cost of funds.

Interestingly, while the loans borrowed by Heirs Holdings from UBA rose by 211.137 per cent between January and June 2023, the interest rate remained the same. The bank’s half-year financial statement showed that the rate was static at 15 per cent.

As of December 2022, the CBN’s MPR was 17.5 per cent, meaning that Heirs Holdings’ loans, particularly the N28.381 billion obtained between January and June 2023, were obtained below the benchmark and market rates.

Heirs Holdings is an investment firm founded by Elumelu in 2010 “to drive private investment and champion entrepreneurship across Africa.”

UBA loans are much higher

The UBA loans to customers cost much higher than 15 per cent. The bank’s personal loan products cost 2.5 per cent interest rate monthly or 30 per cent rate annually. Its personal loan product named, Click Credit attracted 23 per cent interest rate annually before the CBN rate increases began in the middle of 2022.

The bank says on its website that its personal loans attract a one-off management fee of 1 per cent, which means that a borrower will repay the principal amount at 31 per cent interest and management rates.

The personal loan also comprises a maximum loan amount of N30 million, a minimum loan amount of N200,000, and access to up to 60 per cent of the debt service ratio (DSR). UBA also has a school loan, an auto loan, and the Young Entrepreneur Finance Scheme.

UBA earned N428.292 billion from interest income in June 2023 as against N257.361 billion received in June 2022. Interest income represents earnings from loans to third parties, including customers and corporate organisations. Loans to customers, corporates and other entities at UBA were nearly N3 trillion as of June 2023.

Discriminatory loan, unhealthy

Finance experts and small businesses said it was not a good practice for banks to lend to related parties at cheaper rates while demanding an arm and a leg from small businesses.

A Lagos-based small business owner, Theresa Owene, said the discriminatory nature of loans in the banks was hurting the economy.


“If big and connected companies are getting loans at lower interest rates while small businesses are getting them at far higher rates, how then would anybody expect an even development? It is actually the small businesses that should be getting loans at 15 per cent, not big businesses or connected firms,” she said.

A finance expert, Daniel Obiora, said the situation must be checked by the CBN.

“There is nothing wrong with anybody getting a loan from a bank which he or she chairs. However, there is a moral burden on a bank when its related parties are getting loans at cheaper rates. Money in a bank is a liability, so it belongs to depositors. Hence, these depositors must be considered first before even the staff or directors.

“It is not right for directors or bank management to obtain finance at far cheaper rates – even when several depositors cannot get loans from their banks. I think the CBN must begin to check this kind of practice because it creates an unequal society where the rich get richer, and the poor get poorer.”

A former staff member of a Tier-1 bank, Otienne Maxwell, said this was a normal practice in deposit money banks.

“It is nothing strange in banks. If a bank decides 4 or 15 per cent is good for its staff, it is not a problem. However, it is absolutely wrong to give out depositors’ money at low rates when the repo or benchmark rate is nearly 20 per cent. It is often meant to compensate staff or directors for their efforts, but it is discriminatory,” he added.

UBA did not respond

Group Head, Media and External Relations at UBA, Ramon Olarenwaju Nasir, did not respond to enquiries as to why Mr Elumelu obtained loans at 15 per cent – below the market interest rate – from the bank.

This report is republished from the Economy Post.

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