Since 2015, the Central Bank of Nigeria (CBN) has been rolling out multiple intervention programmes to keep Nigeria’s economy afloat.
These interventions in different sectors of the economy range from agriculture, real estate, health and manufacturing.
To enhance the manufacturing sector and improve the real estate sector, the CBN introduced the 100 for 100 Policy on Production and Productivity (PPP); an intervention programme targeted at financially solidifying the local private companies with bankable projects to fund. The programme was also designed to wean Nigeria off massive importation and foreign exchange depletion by bolstering local capacity to meet local demands; create massive jobs, galvanise sustainable economic growth via exports, accelerate structural economic transformation and ultimately promote diversification and productivity.
According to the CBN Governor, Mr Godwin Emefiele, selection criteria for participation are purely based on the businesses’ capacity and capability to swell the nation’s economic fortunes. He added that in selecting the companies, evidence-based, transparent and measurable criteria are deployed and once the apex bank can clearly determine that the private company has a substantial impact on the economy through “Performance Indicators (KPIs)”, it would be picked. Thereafter, the CBN would then screen and finance eligible private sector companies in 100 days, and roll over every 100 days.
The initiative is being funded from the CBN’s Real Sector Support Facility-Differentiated Cash Reserve Requirement (RSSF-DCRR) window and applicants can access it via an online.
The initiative, which would be bank-led, will be rolled over every 100 days (quarterly) with a new set of companies selected for financing under the initiative.
Monthly interests on the facility shall be amortised and transferred quarterly with principal repayments to the CBN. The interest rate under the intervention shall not be more than 5.0% p.a. (all-inclusive) up to 28th February 2022, thereafter, interest on the facility shall revert to 9% p.a. (all-inclusive) effective from 1st March 2022.
So, it was a soothing development on January 31 when 28 selected local firms were unveiled at the CBN headquarters, where they were presented with various banks’ symbolic cheques totalling N23.2 billion.
The money was pooled by seven commercial banks who have keyed into the programme, which among others, seeks to ultimately address the nation’s unemployment nightmare by providing diverse jobs and boosting export in agriculture, healthcare, manufacturing, extractive industries, logistics services, trade-related infrastructure, and renewable energy.
Speaking at the event, the CBN Governor, Mr Godwin Emefiele, explained that under the new scheme, manufacturers in critical sectors that seek to engage in greenfield projects or in expanding their existing facilities will have access to cheaper forms of credit at single digit rates, as well as foreign exchange to procure plants and machineries every 100 days.
“Specifically, for this first cycle of the initiative ending today, 243 applications valued at N321.06 billion, spread over key sectors such as agriculture, energy, healthcare, manufacturing, and services sectors were submitted on the portal. After much engagement, 79 applications were received from banks, valued at N121.87 billion, for projects in six sectors, namely agriculture, energy, healthcare, manufacturing, mining, and services sectors. The requests were carefully screened and scrutinized against a set-out selection criteria, which is categorised into: production efficiency and scalability; local content capacity; job creation and human capital development; operating sector relevance; and potential contribution to economic growth.
“For those seeking to invest in new greenfield or existing brownfield projects, the Bank will continue to provide all the needed support, both in Naira and dollars specifically for the importation of plants and equipment to actualize these investments. It is pertinent to point out that the foreign exchange support will be solely for the importation of spares, plants and equipment needed to increase production capacities of these companies. Let me emphasize that our mission through this initiative is to ensure that priority is accorded to companies who display verifiable progress in our imports substitution and job creation drive. Consequently, we would soon unveil a new FX bidding regime that is market driven and supports companies that accord utmost priority for our local production and job creation drive “Under the N1 trillion Real Sector Facility, the Bank has released a total of N1.40 trillion to 331 real sector projects in agriculture, manufacturing, mining, and services sectors. Under its Real Sector Support Facility (RSSF), the CBN has disbursed N166.21 billion to 25 projects,” he further stated.
In the agricultural sector, the Bank’s Anchor Borrowers’ Programme (ABP) has disbursed N927.94 billion to over 4.5 million smallholder farmers for the cultivation of 21 commodities across the country. Also, the Bank has financed 666 large-scale agricultural projects with the potential of creating an estimated 70,070 direct and indirect jobs under its Commercial Agriculture Credit Scheme (CACS)”, he added.
The CBN Governor appealled to all prospective investors to take advantage of the huge opportunities provided for investment in the real sector under the PPP and approach their banks to submit their applications for participation under the initiative.
Under the ABP, the CBN disbursed N75.99 billion to support the cultivation of over 383,000 hectares of maize, rice and wheat during the 2022 dry season, bringing the cumulative disbursements under the Programme to ₦927.94 billion to over 4.5 million smallholder farmers cultivating 21 commodities across the country. All excess output aggregated from the financed farmers will be released to the Nigeria Commodity Exchange (NCX) to help moderate the prices of food in the market. The Bank also released N1.76 billion to finance two large-scale agricultural projects under the Commercial Agriculture Credit Scheme (CACS).
President Muhammadu Buhari has also commended the CBN for the giant strides saying “The Anchor Borrowers Programme has so far supported over 4.8 million smallholder farmers across Nigeria for the production of 23 agricultural commodities, including maize, rice, oil palm, cocoa, cotton, cassava, tomato, and livestock. Today, rice production in Nigeria has increased to over 7.5 million metric tonnes annually,”
Statistics has shown that the ABP is helping Smallholder farmers in cultivating cereals (rice, maize, wheat etc.) cotton, roots and tubers, sugarcane, tree crops, legumes, tomato and livestock are those captured under this initiative.
Loans are disbursed to the beneficiary farmers through Deposit Money Banks (DMBs), Development Finance Institutions (DFIs) and Microfinance Banks (MFBs), which the programme recognises as Participating Financial Institutions (PFIs).
According to the guidelines of the programme, upon harvest, the farmer repays their loans by taking their harvest to ‘anchors’ who pay the cash equivalent to the farmer’s account.
As part of its pharmaceutical intervention for COVID-19 to cushion the effect of the pandemic on the economy, the CBN unleashed a N100 billion intervention fund.
As a result, most local pharmaceutical industries, with the help of the fund, have been able to boost their production capacities to manufacture facemasks, personal protective equipment (PPP), hand sanitisers, gloves, anti viral drugs, ventilators, medical supplies and vaccines.
The Central Bank of Nigeria (CBN), in response to COVID-19 pandemic, had in April 2020 taken measures to extend credit facilities of up to N100 billion to support intervention efforts geared towards the healthcare sector. The aim of the intervention is to stimulate economic activities locally within the healthcare sector, while making products and services readily available to service Nigerians, thereby building, diversifying and expanding the capacity of the Nigerian healthcare sector.
Statistics show that CBN had disbursed N93 billion of the fund to beneficiaries and serious positive impact has also been felt in the private sector as envisioned by the apex bank. The intervention was with a view to strengthening the sector’s capacity to meet potential increase in demand for healthcare products and services.
Specifically, the scheme was to provide credit to indigenous pharmaceutical companies and other healthcare value chain players to build or expand capacity. The Scheme is expected to increase private and public investment in the healthcare sector, facilitate improvements in healthcare delivery and reduce medical tourism to enhance foreign exchange conservation.
As of today, the manufacturing sector’s intervention funds disbursed by the Central Bank has risen to N803bn, latest statistics from the apex bank has shown.
“Under the N1tn manufacturing intervention stimulus, the total of N803.36bn has been disbursed to 228 projects across various sectors in agro-allied, mining, steel production and packaging industries, among others,” it stated.
In May 2020, the CBN introduced guidelines for the implementation of the COVID-19intervention facility for the manufacturing sector.
It stated that the intervention facility was to support the Federal Government’s palliative measures to support beleaguered manufacturing enterprises in priority economic activities.
The guideline stated that it also focused on boosting local manufacturing capacity and support mass employment, wealth creation and foreign reserve accretion.
Part of the objectives was to improve access to affordable credit by domestic manufacturing enterprises across critical sectors of the economy; and close the financing gap necessary for the replacement of machinery and equipment to enhance local production.
As at today, the manufacturing sector has received a huge boost as a result of the intervention by the apex bank.