Nigeria to stimulate the economy with long-term credit to agric, manufacturing sectors
Abuja, August 24, 2018 (AltAfrica)-The Central Bank of Nigeria (CBN) on Thursday unveiled guidelines for long-term credits to key sectors of the economy to boost real sector growth.
A statement by the bank’s spokesperson, Isaac Okorafor, sent to newsmen, said the financial system regulator resolved to increase the flow of credits to agriculture and manufacturing sectors to consolidate and sustain the nation’s economic recovery.
Under the new arrangement, Corporate/Triple-A rated companies would be encouraged to issue long-term Corporate Bonds (CBs), whose funding programme had already been put in place by the Bank.
“The programme involves investment by the CBN and the general public in CBs issued by corporates subject to the intensified transparency requirements for participating corporates,” he said.Also, such requirements, he noted, would include publishing, through the printing of an Information Memorandum spelling out the details of the projects for which the funds are required.
The funds, together with terms and conditions, would show these are long term projects that would stimulate employment and growth.
Furthermore, Mr Okorafor said the bank had establshed a programme under the Differentiated Cash Reserves Requirement (DCRR) Regime for DMBs interested in providing credit financing to greenfield (new) and brownfield (expansion) projects in the real sector (Agriculture and Manufacturing).
He said interest DMBs could request for the release of funds from their cash reserve requirement (CRR) to finance the projects, subject to their providing verifiable evidence that the funds shall be directed at the approved projects by the CBN.
Apart from the oil and gas sector, which accounts for more than 70 per cent of Nigeria’s revenue, agriculture is the other segment that contributes significantly to the growth of the economy.
At the end of its 119th meeting on July 23 and 24, the Monetary Policy Committee (MPC) of the central bank announced the revised guidelines for accessing Real Sector Support Facility (RSSDF) through Cash Reserves Requirement (CRR)/Corporate Bonds (CBs).
He said this would provide the necessary incentive to deposit money banks (DMBs) to henceforth direct affordable, long-term bank credits to the manufacturing, agriculture, as well as other sectors considered capable of stimulating employment and growth.
On the tenor for the differentiated CRR, Mr Okorafor clarified that this would be a minimum of seven years, with a two-year moratorium.
Besides, for the Corporate Bonds (CBs) Programme, he said the tenor and the moratorium would be specified in the prospectus by the issuing corporate.
In addition, he said the maximum facility shall be N10 billion per project and facilities are to be administered at an all-in interest rate/charge of nine per cent per annum.
Mr. Okorafor called for a total compliance with the guidelines by interest groups, highlighting the eligibility criteria for participation in the facility/CP programme, as well as the responsibilities of the stakeholders.
He reiterated CBN’s determination towards the encouragement of projects that would further enhance Nigeria’s import substitution strategies.