Nigeria: Coronavirus - CBN Slashes Interest Rates On Intervention Funds to 5%

Central Bank of Nigeria.
16 March 2020

The Central Bank of Nigeria (CBN) has dropped interest rates on all its intervention funds from 9 percent to 5 percent.

This is even as the apex bank also announced additional N50billion intervention fund to Micro, Small and Medium Enterprises (MSMEs) to mitigate the negative impact of the Coronavirus pandemic on the affected enterprises nationwide.

The CBN Governor, Mr. Godwin Emefiele, who disclosed this on Monday while briefing the media on strategic measures by the bank to tackle the challenges raised by the virus within the domestic economy, also announced other interventions to cover healthcare, agriculture, manufacturing, oils and gas, among others.

He noted that as a result of this pandemic, revenues accruing to businesses to run their business and pay their bank loans are impacted negatively, thus the CBN expect difficulty of businesses to service their loans.

Emefiele explained that it was against these worrisome developments that the apex bank decided that "all intervention loans currently under moratorium are granted additional moratorium of one year on all principal repayments effective March, 2020."

"Accordingly, participating financial institutions are hereby directed to provide amortization schedule to reflect the new order.

"Interest rates on all applicable CBN facilities are hereby reduced by 9 percent to 5 percent per annum for one year effective March 1, 2020.

"The CBN hereby establishes a facility through NIRSAL Microfinance Bank to the sum of N50billion for households, MSMEs that have been particularly hit by Covid-19 including but not limited to hoteliers, airlines services providers, health care merchants, and so on", the governor added.

He also announced an unspecified credit support for health care industry, saying that in order "to meet potential demand for health care services and products, the CBN hereby opens for intervention facilities loans to pharmaceutical companies intending to expand or establish their own drugs manufacturing plants in Nigeria as well as to hospital and health care practitioners who intend to build or expand to world class standards."

According to him, the CBN also plans to increase intervention support to agricultural and manufacturing sectors.

Emefiele also announced a regulatory forbearance to big businesses by granting "banks leave to consider temporary restructuring of the tenure and loan terms for businesses and households most affected by the outbreak, particularly the oil and gas, agric and manufacturing."

He said the apex bank was optimistic that these measures will help mitigate the impact of Covid-19 on the Nigerian economy.

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