CENTRAL BANK NIGERIA COLLAPSES INTEREST RATE FOR FAVOURED SECTORS

Soon, triple A rated companies in Nigeria and others involved in sectors considered critical to be employment generating and growth stimulating will access long term loans at maximum of 9 % per annum.

According to the Central Bank of Nigeria in guidelines for the scheme released on Thursday August 23, 2018, it will be executed under two facilities: Banks accessing their cash reserves with the CBN to extend the credit and companies that qualify issuing corporate bonds the CBN and the public will subscribe to.

Both facilities will carry maximum of 9% interest or coupon; have not less than 7 years tenor and also have moratorium not less than 2 years 

According to the CBN, at the July Monetary Policy Committee meeting of the apex bank, it was decided that credit be deliberated be made available to these companies at affordable rates and on long term basis.

Hence, through the new scheme, says the CBN " Deposit Money Banks will henceforth be incentivised to direct affordable long term credit to the manufacturing , agriculture as well as other sectors considered by the CBN as employment and growth stimulating".

Trading activities are not covered by both facilities and none of the funds procured under it must be directed to such activities under any guise.

It is also not to be used to refinance of pay off existing loans  and funds must be disbursed to beneficiaries within 5 days of release by the CBN in the case of funding the cash reserve window.

Maximum amount per project is N10 bn and any bank that charges all inclusive interest rate on the scheme above 9% should be reported to the CBN without fail.

However, new projects stand a better chance of scaling the hurdles for the facilities because, adds the CBN, that is the major emphasis of the strategy but expansion projects also stand a chance.

Above all, the higher the local content in the project, the easier will it be to scale the hurdles.

Of course, this is good news for companies that fall into the stated brackets because 9% is a big decline on even the 14% the CBN now gives credit to banks not to talk of the near or above 20% charged by banks.

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