Taxpayers at Risk as SLCB Issues NLe356 Million Loans Without Collateral–Audit Report
By Musa Paul Feika
The Sierra Leone Commercial Bank (SLCB), the country’s largest state-owned financial institution, has come under renewed public scrutiny following revelations in the 2024 Auditor General’s Report that it issued unsecured loans amounting to NLe356,579,171.71 as of 31st December 2024.
The findings have reignited debate around risk management, corporate governance, and the safety of public funds within state-owned banks.
According to the Auditor General, the loans were granted without collateral, exposing the bank to significant credit risk should borrowers default. Unsecured lending, while not illegal, is widely regarded in banking practice as high-risk, particularly when extended on a large scale without robust mitigation measures.
The audit report indicates that the unsecured loans were spread across six major lending categories, with ordinary loans accounting for the largest portion.
A total of NLe125,642,642.38 was issued under this category without collateral, raising questions about the bank’s credit appraisal process and adherence to internal lending policies.
This was closely followed by foreign loans, which stood at NLe107,500,000.00, another substantial exposure that auditors flagged as concerning given the additional risks associated with foreign currency lending, including exchange rate volatility. Overdraft facilities amounted to NLe67,676,150.25, also issued without security, further deepening the bank’s vulnerability.
Other unsecured facilities cited in the report include staff-related loans and special purpose lending arrangements, which together contributed to the overall figure exceeding NLe356 million. The auditors noted that in several cases, there was no evidence of management approval waivers, credit committee justifications, or alternative risk mitigation measures such as guarantees or insurance.
The Auditor General warned that the absence of collateral significantly increases the likelihood of loan losses, which could negatively impact the bank’s liquidity, profitability, and capital adequacy. Given SLCB’s strategic role in financing government projects, public institutions, and private sector activities, such weaknesses pose broader systemic risks to the financial sector.
Financial analysts say the findings are particularly troubling at a time when Sierra Leone is grappling with economic pressures, including high inflation and constrained public finances. “When a state-owned bank exposes itself to this level of unsecured lending, the ultimate risk is borne by taxpayers. If these loans turn non-performing, the government may be forced to intervene,” one banking expert noted.
The report also raises governance concerns, with auditors recommending that SLCB strengthens its credit risk management framework, enforces compliance with collateral requirements, and ensures that any exceptions are properly documented and approved at the highest level. The auditors further called for enhanced oversight by the bank’s board of directors and regulators.
Public accountability advocates have urged authorities to go beyond recommendations and ensure corrective action. Some have called on the Anti-Corruption Commission (ACC) and the Bank of Sierra Leone to examine whether the unsecured loans breached prudential guidelines or involved preferential treatment.
In response to similar audit findings in previous years, SLCB management has often argued that certain unsecured loans were extended to strategic clients or backed by expected cash flows rather than physical assets. However, the 2024 audit underscores the need for clearer justification and stronger safeguards.
As calls for financial discipline grow louder, the spotlight remains firmly on SLCB to demonstrate that public trust in the banking system is not misplaced. How the bank addresses the Auditor General’s concerns will be closely watched, not only by regulators and policymakers, but by citizens whose economic stability ultimately depends on the sound management of public financial institutions.
