- Offers support to DMBs, households, SMEs, others
- Slashes interest rates to 5%
BY CHINYERE OBIORA, LAGOS – In line with its financial system stability mandate and resolve to cushion the adverse global impact of Coronavirus outbreak on Nigeria, the Central Bank of Nigeria (CBN) on Monday announced strategic policy measures aimed at protecting and insulating the nation’s economy from the pandemic.
The initiative is to provide support for affected households; businesses; regulated financial institutions; other stakeholders and players in the nation’s financial system.
The CBN said its current moves became imperative given that the unfortunate development has already caused unprecedented disruptions in global supply chains; sharp reduction in crude oil price; turmoil in global stock and financial markets.
It said under the new policy, all its intervention facilities are granted further moratorium of one year on all principal repayment, effective from March 1, 2020.
A CBN circular signed by its Director in charge of Financial Policy and Regulations, Kevin Amugo explained that any intervention loan currently under moratorium are thereby granted additional period of one year.
In directing participating financial institutions to provide new amortization schedules for all beneficiaries, the statement said interest rates on all applicable CBN intervention facilities are also reduced from nine per cent to five per cent per annum for a period of one year with effect from March 1, 2020.
It further stated that the apex bank has established a facility through the NIRSAL Microfinance Bank for house holds as well as Small and Medium Enterprises (SMEs) that have been particularly hard hit by Covid-19, including hoteliers, airlines service provider, health care merchants.
My Amugo said to meet the potential increase in demand for healthcare services and products, the CBN has also opened for its intervention facilities and loans to pharmaceutical companies intending to expand and/or open their drug manufacturing plants in Nigeria as well as hospital and healthcare practitioners who intend to expand or build health facility to first class centre.
Accordingly, the CBN therefore granted Deposit Money Banks (DMBs) 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, especially Oil and Gas, Agriculture and Manufacturing.
However, the apex bank promised to work assiduously and closely with DMBs to ensure the use of this forbearance is targeted; transparent; and temporary while maintaining individual DMB’s financial strength and overall financial stability of the system.
The statement further said in view of the success of the LDR policy in growing credit to the economy and reducing interest rate, the CBN would further support industry funding levels to boost and maintain DMBs’ capacity to direct credit to individuals, households and businesses.
On the global effects of the World Health Organisation (WHO)-declared pandemic, the CBN admitted that the Corona virus is already inflicting unimaginable negative consequences on both global and the Nigerian economies.
It regretted that the virus outbreak has led to massive cancellations of sporting, entertainment and business events, with the resultant effect being lockdown of large swaths of movements of persons in many countries as well as intercontinental travel restrictions across critical air routes in the world.
