CORONAVIRUS: CBN SLASHES INTEREST RATE TO 5%

Announces N50bn facility for hard hit MSMEs

As part of the measures to cushion the effects of Coronavirus on the economy, the Central Bank of Nigeria (CBN) has on Monday announced the slash of interests on its various intervention programmes worth about N3 trillion to five per cent. This is a change from the current nine per cent per annum for 1-year, and is effective from March 1, 2020.

Mr Godwin Emefiele, governor of CBN, who announced this also disclosed a further moratorium of one year on all principal repayments on all CBN intervention facilities.

“This means that any intervention loan currently under moratorium is hereby granted an additional period of one year. Accordingly, participating financial institutions are hereby directed to provide new amortization schedules for all beneficiaries.”

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CBN also created a N50 billion targeted credit facility through the NIRSAL Microfinance Bank for households and small- and medium-sized enterprises (SMEs) that have been particularly hard hit by Covid-19, including, but not limited to hoteliers, airline service providers, and healthcare merchants.

Furthermore, in order to meet potential increase in demand for healthcare services and products, CBN 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.

“This is in addition to growing the size of existing interventions to the agricultural and manufacturing sectors in Nigeria,” Emefiele stated.

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The fifth of the sixth point roll out is regulatory forbearance, which granted 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 outbreak of Covid-19 particularly oil & gas, agriculture, and manufacturing.

The governor said, “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.”

In addition, in view of the success of the lending to deposit ratio (LDR) policy in growing credit to the economy and reducing interest rates, Emefiele announced that CBN would further support industry funding levels to maintain DMBs’ capacity to direct credit to individuals, households, and businesses.

While explaining that CBN will also consider additional incentives to encourage the extension of longer-tenured credit facilities, Emefiele encouraged banks to continue to build capital buffers in order to improve the resilience of the sector.

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“The bank stands 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. The CBN shall continue to monitor developments and will issue further updates as may be appropriate,” he stated.