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CBN Releases Guidelines For New Financial Instrument, Sets N5bn Loan Limit


Ebuka Daniel

The Central Bank of Nigeria has released a framework to guide the implementation of its new financial instrument, the 100 for 100 Policy on Production and Productivity.

The initiative is targeted at funding private owned companies in the country.

The CBN Governor, Mr Godwin Emefiele, had earlier this month announced the launch of the initiative, which he said will boost local production significantly and reverse Nigeria’s over reliance on imports.

The CBN had also earlier listed the criteria for selection under the programme to include immediate contribution to economic growth, jobs creation, and social impact.

It added that the criteria to be used in the selection process would be evidence-based, transparent and measurable.

The new guideline which was issued on Sunday, stated that the maximum loan amount to be given under the programme is N5bn.

It added that any loan request above this amount will require the special approval of the Bank’s management.

It reads, “Loan amount shall be a maximum of N5bn per obligor. Any amount above N5bn shall require the special approval of CBN’s Management.”

For loan types, the CBN said that an obligor can either acquire a long-term loan for the purchase of plant and machinery or working capital.

The apex bank also stated that the maximum tenor of loans is 10 years depending on the complexity of the project and must not exceed December 31st 2031.

“Each project tenor shall be determined in relation to its cash flow and life span of the underlying collateral,” the guidelines added.

It noted that term loans will have two years moratorium, while working capital facility would have a tenor of one year with provision for roll over for a maximum of three years.

The CBN pegged interest rate for loans acquired under the programme at five per cent up until February 28th 2022.

It added that thereafter, the rate will revert to nine per cent.

On repayment, the bank said, “monthly interests on the facility shall be amortized and transferred quarterly with principal repayments to the CBN.”

The initiative, the CBN said, will be funded from the its Real Sector Support Facility – Differentiated Cash Reserve Requirement window or any other funding window as may be determined by the Bank.

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