CBN Covid-19 Palliatives: N50b loan for affected businesses

  • Reduced interest rate on N3tr intervention fund, loans to pharmaceutical companies

A set of measures to cushion the worsening global effects of the Coronavirus (Covid-19) pandemic on the Nigerian economy and citizenry, including a N50 billion targeted credit facility for more affected households and Small and Medium Enterprises (SMES), has been released by the Central Bank of Nigeria (CBN).

Announcing the palliatives in Abuja Monday, the CBN Governor, Mr. Godwin Emefiele, said the Covid-19 outbreak has had serious adverse implications for key sectors of the Nigerian economy, especially oil and gas, aviation, manufacturing, trade and consumer markets.

He disclosed that the credit facility, which is to be disbursed through the Nigeria Incentive-based Risk Sharing System for Agric Lending (NIRSAL) Microfinance Bank, is targeted at hoteliers, airline service providers, and healthcare merchants, among others.

Similarly, the CBN reduced interest rates on all its applicable intervention facilities from 9 to 5 per cent per annum for a year, effective March 1, 2020, while a N3 trillion special intervention fund is now in place for its different programmes in various sectors of the economy, including the Anchor Borrowers’ Programme.

Also, all CBN intervention facilities will enjoy a further 12-month moratorium on all principal repayments effective March 1, 2020. To that end, participating financial institutions have been directed to provide new amortisation schedules for all beneficiaries.

However, Emefiele explained that though the measures were not intended to directly alter the apex bank’s Monetary Policy Rate (MPR), its Monetary Policy Committee might adjust the interest rate in line with current realities.

The CBN loan facilities are also extended to hospital and healthcare practitioners who intend to build or expand their facilities to first class centres, and pharmaceutical companies willing to open or expand their drug manufacturing plants in in the country, all geared at satisfying a potential demand increase for healthcare.

Equally, all deposit money banks (DMBs) have been permitted to consider a temporary restructuring of the tenor and loan terms for businesses and households most affected by the pandemic, especially in oil and gas, agriculture and manufacturing.

It will as well support industry funding levels to maintain DMBs’ capacity to direct credit to individuals, households and businesses, while considering “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.”

However, it will “work closely with DMBs to ensure that the use of this forbearance is targeted, transparent and temporary, while maintaining individual DMB’s financial strength and overall financial stability of the system.”

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