The Central Bank of Nigeria (CBN) has dropped interest rates on all its intervention funds from 9 percent to 5 percent. This is even as the apex bank also announced additional N50bn intervention fund to micro, small and medium enterprises (MSMEs) to mitigate the negative impact of the pandemic on the affected enterprises nationwide.
The CBN Governor, Mr. Godwin Emefiele, who made these disclosures on Monday while briefing the media on strategic measures by the bank to tackle the challenges raised by the virus within the domestic economy, also announced other interventions to cover healthcare, agriculture, manufacturing, oils and gas, among others.
The banker noted that as a result of this pandemic, revenues accruing to businesses to run their business and pay their bank loans are impacted negatively, thus the CBN expect difficulty of businesses to service their loans. Emefiele explained that it was against these worrisome developments that the apex bank decided that “all intervention loans currently under moratorium are granted additional moratorium of one year on all principal repayments effective March, 2020.
Accordingly, participating financial institutions are hereby directed to provide amortization schedule to reflect the new order. “Interest rates on all applicable CBN facilities have been hereby reduced by 9 percent to 5 percent per annum for one year effective March 1, 2020.”
“The CBN hereby establishes a facility through NIRSAL Microfinance Bank to the sum of N50bn for households, MSMEs that have been particularly hit by Covid-19 including but not limited to hoteliers, airlines services providers, health care merchants, and so on”, the governor added.
He also announced an unspecified credit support for health care industry, saying that in order “to meet potential demand for health care services and products, the CBN hereby opens for intervention facilities loans to pharmaceutical companies intending to expand or establish their own drugs manufacturing plants in Nigeria as well as to hospital and health care practitioners who intend to build or expand to world class standards.” According to him, the CBN also plans to increase intervention support to agricultural and manufacturing sectors.
Emefiele also announced a regulatory forbearance to big businesses by granting “banks leave to consider temporary restructuring of the tenure and loan terms for businesses and households most affected by the outbreak, particularly the oil and gas, agric and manufacturing.”
He said that the apex bank was optimistic that these measures will help mitigate the impact of Covid-19 on the Nigerian economy. Commenting on the newly announced measures, President of Manufacturers Association of Nigeria (MAN), Engr. Mansur Ahmed, said he was optimistic that the measures would impact on the economy deeply.
According to the industrialist, “whilst our key focus should be at preventing the spread of the virus, our major trading partners have been heavily impacted and that has direct implication for how well we will fare.” Ahmed said since the apex bank has taken the lead, it is necessary for the government to ensure that other regulatory authorities step up to complement in areas where they can ease the burden for drivers of economic activities.
“Look at the port for instance; there is a lot of delay and inconveniencies that can be ameliorated”, he said. He said the leadership of MAN will move to ensure that the operators understand the conditions under which these incentives are provided. The National Coordinator, Association of Women in Micro, Small and Medium Enterprises (AWIMSME), Mrs. Nancy Nathaniel, said the impact of the 5% downward review of interest rate on intervention funds by the apex bank “will encourage women operators in the MSME space across economic sectors to adhere to best business and good agronomy practices because they will have more money to standardise and certify their products and services.
“This reduction of interest will stimulate more interest among women business owners to key into the various initiatives, including the Agriculture, Small And Medium Enterprise Scheme (AGSMEIS), Anchor Borrowers Scheme, etc.”, the AWISMEIS leader said. President National Association of Small and Medium Enterprises (NASME) Prince Degun Agboade, said: “The good news for even for manufacturers and then for those who produce foods. They will appreciate it.
The funds were meant for manufacturers in the first instance but many of us did not get it, now that the good news has come, I hope they will make it more available to MSMEs. I think it is a welcome development. We at NASME welcome the measures and we hope that CBN will see to it that it’s done and it will not only be pronouncements but getting the funds to the end users.
In a similar tone, the Director General for Global Centre Human Empowerment and Entrepreneurship Development, Mrs. Rose Gyar said she was excited because it’s going to impact on SMEs positively. She said: “The interest rate which was reduced will now be plowed back into their capital and it will help sustain their businesses. It will support their competiveness because more funds more money to carry out businesses.”
