CBN Unveils Guidelines For Single Digit Credit To Agric, Manufacturing


The agricultural, manufacturing and the sectors considered as growth and employment stimulating, can now borrow long term as much as N10 billion at consolidated nine percent interest rate under new guidelines issued by the Central Bank of Nigeria (CBN).
The CBN Monetary Policy Committee (MPC) had at its 119th meeting held on July 23 and 24, 2018, introduced its revised guidelines for Accessing Real Sector Support Facility (RSSDF) through Cash Reserves Requirement (CRR)/Corporate Bonds (CBs).
Giving further clarifications on the guidelines on Thursday, August 23, 2018, the Bank’s acting Director of Corporate Communications, Isaac Okorafor, said the bank hoped to achieve the flow of credit to the real sector of the economy as deposit money banks (DMBs) would henceforth be incentivised to direct affordable, long-term bank credit to the manufacturing, agriculture, as well as other sectors considered by the bank as employment and growth stimulating.
Okorafor disclosed that Corporate/Triple-A rated companies would be encouraged to issue long-term Corporate Bonds (CBs), adding that Corporate Bonds (CB) Funding Programme had been put in place.
The programme, according to him, involves investment by the CBN and the general public in CBs issued by corporates subject to the intensified transparency requirements for participating corporates.
He also noted that such requirements would include publishing, through the printing of an Information Memorandum, spelling out the details of the projects for which the funds are required, together with terms and conditions showing that these are long-term projects that are employment and growth stimulating.
Furthermore, he disclosed that the bank had put in place a programme under the Differentiated Cash Reserves Requirement (DCRR) regime whereby DMBs interested in providing credit financing to greenfield (new) and brownfield (expansion) projects in the real sector (agriculture and manufacturing) could request for the release of funds from their CRR to finance the projects, subject to DMBs providing verifiable evidence that the funds shall be directed at the approved projects by the CBN.
Making further clarifications, he said the tenor for the Differentiated CRR would be a minimum of seven years with a two-year moratorium.
For the Corporate Bonds (CBs) programme, he said the tenor and the moratorium would be specified in the prospectus by the issuing corporate.
He added that the maximum facility shall be N10 billion per project and facilities are to be administered at an all-in interest rate/charge of 9 percent per annum.
Okorafor, therefore, advocated a total compliance with the guidelines by stakeholders and also highlighted the eligibility criteria for participation in the facility/CP programme, as well as the responsibilities of the stakeholders.
He reiterated the CBN’s determination towards the encouragement of projects that would further enhance Nigeria’s import substitution strategies.