- ‘CBN’s Long-term Real Sector Credit Will Strengthen Economy’
The recently introduced guidelines for accessing the Central Bank of Nigeria’s (CBN) real sector support facility will help in strengthening the Nigerian economy.
The Acting Director, Corporate Communication, CBN, Mr. Isaac Okorafor, who gave insight to the new guidelines, while speaking on Arise News Television, said it would help in stabilising the economy, boost job creation and further propel economic growth.
According to him, “The initiative is an innovation from CBN to stabilise the economy after coming out of recession, and it is targeted at the agriculture, manufacturing, including the micro, small and medium scale enterprises (MSMEs)”
Addressing the issue of possible diversion of funds and probably giving such loan facility to friends and allies because of its low interest rate, Okoroafor said CBN had put three monitoring systems in place to check possible abuse.
He insisted that the funds were meant for greenfield and brownfield, which are new and existing projects and not for refinancing failed or wobbling projects.
He explained that any participating banks that derails from the given guidelines would be severely sanctioned.
“Under the CBN long term loan financing, we are giving corporate bonds a new impetus, such that anybody can participate in it and enjoy the long-term financing of the CBN,” Okorafor said, while assuring Nigerians that the initiative would further strengthen the economy and make it easy for manufacturing and agricultural related businesses to thrive.
In the area of deployment of the fund, Okorafor also assured Nigerians of fast deployment to the benefit of all Nigerians that are in manufacturing and agricultural businesses.
At its July 2018 Monetary Policy Committee (MPC), the CBN had emphasised the need to increase the flow of credit to the real sector of the economy, to consolidate and sustain economic recovery.
To achieve this objective, the central bank had also stated that banks would henceforth be incentivised to direct affordable, long-term bank credit to the manufacturing, agriculture, as well as other sectors considered as employment and growth stimulating.
Also, it had stated that Corporates/Triple A-rated companies would be encouraged to issue long-term corporate bonds (CBs).
But under the new guidelines, the CBN pointed out that banks interested in providing credit financing to Greenfield (new) and Brownfield (new/expansion) projects in the real sector (agriculture and manufacturing) may request the release of funds from their CRR to finance the projects, subject to the bank providing verifiable evidence that the funds shall be directed at the projects approved by the CBN.