…cuts interest rate on N3trn intervention fund
…announces loans to Pharmaceutical companies
As a response to the Coronavirus pandemic that is having significant adverse consequences for both the global and the Nigerian economies, the Central Bank of Nigeria (CBN) has announced the establishment of N50 billion targeted credit facility for households and small- and medium-sized enterprises (SMES) operating in Nigeria that have been particularly hard hit by Coronavirus (Covid-19) outbreak. The targeted beneficiaries include but not limited to hoteliers, airline service providers, and health care merchants, amongst others.
The facility will be disbursed through the Nigeria Incentive-based Risk Sharing System for Agric Lending (NIRSAL) Microfinance Bank.
The apex Bank also announced that it has reduced interest rates on all applicable CBN intervention facilities from 9 to 5 per cent per annum for 1 year period; effective March 1, 2020. CBN has a N3 trillion special intervention fund for its different programmes in various sectors of the economy, including Anchor Borrowers’ Programme, ASMES.
CBN Governor Godwin Emefiele who announced the new measures yesterday at a media briefing in Abuja stated that the aim was to cushion the adverse economic impact of the pandemic.
The new measure does not directly mean an alteration to the CBN’s Monetary Policy Rate (MPR). The Governor however indicated that the Monetary Policy Committee of the CBN may adjust the prevailing interest rate in line with current realities.
Mr. Emefiele said all CBN intervention facilities are granted a further moratorium of one year on all principal repayments, effective March 1, 2020. This means that any intervention loan currently under moratorium “are hereby granted additional period of one year.”
Accordingly, participating financial institutions were directed to provide new amortization schedules for all beneficiaries.
To meet potential increase in demand for healthcare services and products, the CBN said it has also opened for its intervention facilities, loans to Pharmaceutical companies intending to expand/open their drug manufacturing plants in Nigeria as well as to Hospital and Healthcare practitioners who intend to expand/build the Health facilities to first class centres.
That is in addition to growing the size of existing interventions to the Agricultural and Manufacturing sectors in Nigeria.
Apart from that, the CBN said it was granting all Deposit Money Banks leave to consider temporary and time-limited restructuring of the tenor and loan terms for businesses and households most affected by the outbreat of Covid-19 particularly Oil & Gas, Agriculture, and manufacturing.
“The CBN would work closely with DMBs to ensure that the use of this forbearance is targeted, transparent and temporary, whilst maintaining individual DMB’s financial strength and overall financial stability of the system,” Emefiele said.
In view of the success of its Loan-to-Deposit (LDR) Policy in growing credit to the economy and reducing interest rates, the CBN said it will further support industry funding levels to maintain DMBs capacity to direct credit to individuals, households, and businesses. “We will also consider additional incentives to encourage extension of longer tenured credit facilities. DMBs are encouraged to continue to build capital buffers in order to improve resilience of the sector,” he added.
Emefiele said the Bank is ready to provide liquidity backstops as and when required in view of its role as Banker to the Federal Government and lender of last resort.
He noted that the outcomes of the coronavirus outbreak have had serious adverse implications for key sectors, especially oil and gas, airlines, manufacturing, trade and consumer markets.