CBN Unveils Guidelines To Increase Credit Flow To Agriculture, Manufacturing

As part of efforts to consolidate and sustain the nation’s economic recovery, the Central Bank of Nigeria (CBN) has rolled out guidelines to increase the flow of credit to the real sector of the economy.

The CBN Acting Director of Corporate Communications, Mr Isaac Okoroafor in a statement on Thursday, said the apex Bank would through the deposit money banks (DMBs) direct affordable, long-term bank credit to the manufacturing, agriculture, as well as other sectors considered by the Bank as employment and growth stimulating.

It will be recalled that the CBN Monetary Policy Committee (MPC), 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).

Mr. 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 the spokesman, involves investment by the CBN and the general public in CBs issued by corporates subject to the intensified transparency requirements for participating corporates.

Okorafor also noted that such requirements would include publishing through 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, the CBN spokesman said that the tenor for the Differentiated CRR would be a minimum of seven years with a two-year moratorium.

For the Corporate Bonds (CBs) Programme, Okorafor said the tenor and the moratorium would be specified in the prospectus by the issuing corporate.

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 9 per cent per annum.

Okorafor therefore advocated for 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; just as he reiterated the CBN’s determination towards the encouragement of projects that will further enhance Nigeria’s import substitution strategies.