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How to Apply for CBN’s 100 for 100 PPP Loan

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The Central Bank of Nigeria (CBN) recently kick-started the 100 for 100 Policy on Production and Productivity, targeted at private companies willing to apply for a loan to fund a project.

Last month, CBN Governor Godwin Emefiele said that the policy would take prospective beneficiaries through a process of scrutiny before they would be deemed eligible for the loan. Selected companies can apply for loans of up to N5 billion under the 100 for 100 policy.

The CBN will use Key Performance Indicators (KPIs) to evaluate whether or not the company can have a direct impact on the nation’s economy. It was also confirmed that the policy would involve 100 companies in 100 days, before rolling over to the next 100 days. The interest rate on the loans under the policy will not be higher than 5.0% p.a. until February 28th 2022 when it will revert to 9% p.a.

The Key Performance Indicators to be considered by the CBN include: rate of growth in production output, increase in capacity utilization, increase in export volume, increase in export value, decrease in industrial raw material import volume, decrease in industrial raw material import value, and increase in a number of jobs generated.

The companies interested must submit applications to their Participating Financial Institutions (PFIs, i.e. banks partnering with the Central Bank in the policy execution), together with the necessary documents. Some of the documents required for the application include Financial statements, certified copies of the company’s registration with the Corporate Affairs Commission (CAC), three years of audited finances, evidence of the company’s worthiness, at least two credit reports of the company and directors.

Other necessary documents include a business plan of the project for which the loan is being acquired, and a detailed status report on the project’s capacity utilization, production output, efficiency level, employment level, export capacity, and value creation. Companies also need to provide projections of increased capacity utilization, production output, productivity level, employment level, export capability, and value creation in order to represent the project’s economic benefits after financing. Applicants will notify the CBN of submitted applications through a dedicated online portal on the official website at 100 for 100 ppp.

Once the lending bank receives the application, it will conduct due diligence based on business and credit. After that, the bank will forward the applications of the eligible private companies to the CBN for approval by the appropriate Private Finance Initiative Credit Committee.

The CBN will then screen and accept eligible companies for 100 days, before rolling over to the next 100 days. After that, the CBN will release the approved amount to the Participating Financial Institution for disbursement to the selected private companies. The successful beneficiaries will be published nationally for Nigerians to verify with details of the facility granted, operating sector, manufacturing activities that have been financed, and Participating Financial Institution.

 

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Central Bank of Nigeria Increases Interest Rate on Intervention Loans From 5% to 9%

The Central Bank of Nigeria has increased interest rates intervention loans to 9% per annum to ease the nation’s record high inflation rate.

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Loan - Investors King

The Central Bank of Nigeria (CBN) has increased interest rates on all its intervention loans by 4% from 5% to 9% per annum to ease the nation’s record high inflation rate.

Chibuzo Efobi, director of financial policy and regulations department of the CBN, disclosed in a circular to all banks and Other Financial Institutions (OFIs) dated August 17, 2022.

CBN had reduced interest rates on intervention loans from 9% to 5% per annum in the first quarter of 2020 to help curtail the impact of COVID-19 on businesses and the Nigerian economy at large.

However, the nation’s almost 20% inflation rate despite efforts to halt price increase has forced CBN to start mopping currency in circulation. One of the initiatives introduced in the last two months was to return interest on intervention loans.

This was announced just two days after the apex bank reviewed upward the minimum interest rate payable on savings deposits from 0.15% to 4.2%, 30% of the Monetary Policy Rate (MPR).

In the last two months, the CBN has risen the interest rate by 250 basis points to 14%, increase interest on intervention loans and raised minimum interest rate on savings deposits to contain inflationary pressure.

Nigeria’s inflation rose to 19.6% in the month of July as the value of the Nigerian Naira took a hit against global currency amid rising demand for the United States Dollar in an economy that depends on imports for most of its consumption.

This pushed prices of imported goods or locally made goods with imported items to a record-high as businesses were forced pass to increase in cost to final consumers.

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Research Indentifies Major Factors in Growth of Structured Credit Market

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capital market - Investors King

A new survey from Aeon Investments, the London based credit-focused investment company, with institutional investors in Europe and the US who collectively have around $574 billion in assets under management, reveals the major factors behind more professional investors increasing their allocation to structured credit.

When asked for their top three reasons for this trend, 44% selected greater innovation in the structured credit market, followed by 40% who included greater transparency in the sector.

This was followed by an improving regulatory environment, which 31% of professional investors included in their top three reasons for more professional investors increasing their allocation to structured credit; 22% cited the fact that they can offer attractive yields, which have become even more appealing given the current difficulties in the fixed income market, and one in five (20%) selected the sector’s growing focus on ESG. Some 13% cited structured credit’s ability to offer attractive diversification benefits as one of their top three reasons.

Which structured credit sectors will see the biggest increase in asset allocation from investors?

In terms of which areas of the structured credit market is likely to see the biggest inflows from investors over the next 18 months, 63% anticipate allocations to products focusing on residential real estate will see an increase, and 63% also expect this from those investment vehicles focusing on commercial real estate. Some 49% of respondents expect an increase in investment inflows into structured credit vehicles focusing on consumer credit such as student loans, auto credit/leases, compared to 11% who anticipate a decline. The corresponding figures for flows into structured credit vehicles concentrating on specialist areas of corporate finance such as commercial aviation, shipping, and trade receivables, is 42% and 12%.

Evgeny van der Geest, Managing Director, Aeon Investments said: “In recent years, the structured credit market has seen huge developments in terms of maturity and transparency, and this trend continues to gather pace. This, coupled with a growing desire to diversify portfolios and the search for yield, means more professional investors are increasing their allocation to structured credit investments.”

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Private Sector Loans Reaches All-Time High of N37.13 trillion in April – CBN says

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Godwin Emefile

The Central Bank of Nigeria (CBN) has said credit to the private sector rose to N37.13tn as of April 2022 as banks increase lending to the real sector to create jobs and expand the country’s Gross Domestic Product (GDP).

The apex bank disclosed in its ‘Money and Credit Statistics’ report. From the year to date, credit to the private sector rose by 5.53% or N1.95 trillion from N35.18 trillion reported in January 2022.

In 2021, credit to the private sector jumped by N5.58 trillion to a record N35.73 trillion.

In the latest report from the central bank, credit to the private sector rose from N35.99 trillion in February to N36.37 trillion in March 2022, representing an increase of 1.07%.

The Monetary Policy Committee (MPC) attributed the growth in private sector lending to the increase in industry funding base and compliance with the 65 percent Loans to Deposit Ratio (LDR) directive.

The CBN also disclosed that it had reviewed the performance of its various interventions to stimulate productivity in manufacturing, industry, agriculture, energy, infrastructure, healthcare, and micro, small and medium enterprises.

The governor of CBN, Mr. Godwin Emefiele, in his statement at the end of March MPC, noted that the growth reflected the continued growth of banking system credits to the private sector supported by the sustained drive of the apex bank to increase lending to high-impact real sector ventures. 

He had disclosed that gross credit maintained its upward trajectory since 2019, with an N4.13tn or 19.53 percent growth in industry credit between February 2021 and 2022.

Deputy Governor of Financial System Stability of the CBN, Aisha Ahmad, at the MPC meeting of March 2022 in Abuja, said, “The continued credit growth, particularly to output enhancing sectors, is expected to support economic recovery further. However, sustained regulatory vigilance is required to mitigate any potential crystallization of credit risk in the financial system from lingering macroeconomic risks.”

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