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CBN Creates N50b Credit Facility to Cushion COVID-19 Effects

Central Bank of Nigeria CBN

By Tony Obiechina, Abuja

The Central Bank of Nigeria (CBN), has announced the creation of N50 billion credit facility to cushion the effect of the adverse economic impact of the COVID-9 otherwise known as Coronavirus pandemic on households, Small and Medium Enterprises (SMEs) in the country.

 

The Apex Bank also announced a reduction from 9 to 5 percent interest rates on all applicable CBN intervention facilities per annum for one year with effect from March, 1, 2020.

CBN Governor, Mr Godwin Emefiele who announced these measures while addressing a press conference at the bank’s headquarters on Monday in Abuja said that they became necessary because of the adverse consequences the coronavirus pandemic is having for both the global and the Nigerian economies.

He said, “the Central Bank in furtherance of its financial stability mandate is committed to providing support for affected households, businesses, regulated financial institutions and other stakeholders in order to cushion adverse economic impact of this pandemic”.

Emefiele explained that the credit facility would be established through the NIRSAL Microfinance Bank, for institutions that have been “particularly hard hit by COVID-19, including but not limited to hoteliers, airlines, healthcare merchants”.

The Governor also stated that all CBN intervention facilities have been granted a further moratorium  of one year on all principal repayments, effective March 1, 2020.

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

The Governor also announced that in order to meet potential increase in demand for Healthcare services and products, the CBN has opened for its intervention facilities, loans to Pharmaceutical companies intending to expand or 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, according to him, is in addition to growing the size of existing interventions to the Agricultural and Manufacturing sectors in Nigeria.

He also stated that the CBN has 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 outbreat of Covid-19 particularly Oil & Gas, Agriculture, and manufacturing. 

“The CBN would work closely with DMBs to ensure that the use of this forpearance is targeted, transparent and temporary, whilst maintaining individual DMB’s financial strength and overall financial stability of the system”, he added.

Speaking further, Emefiele said, “in view of the success of the LDR Policy in growing credit to the economy and reducing interest rates, the CBN would 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.

“The Bank stands ready to provide liquidity backstops as and when reguired 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 said. 

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