Central Bank issues guidelines for N300 billion real sector loan


To help unlock the real sector potential to engender output growth, value addition and job creation, the Central Bank of Nigeria has established a N300 billion support facility.

The facility would provide financing to support start-ups and expansion of large enterprises requiring an average of N500 million and N10 billion to grow their productive capacities.

The real sector activities targeted include manufacturing, agricultural value chain and selected service sub-sectors to improve access to the country’s small and medium enterprises, to fast-track their development in the economy.

The facility would also help increase output, generate employment, diversify the revenue base, increase foreign exchange earnings and provide inputs for the industrial sector on a sustainable basis.

The guidelines, issued by the Director, Development Finance Department of the CBN, Paul Eluhaiwe, classified manufacturing as any entity involved in the production and processing of tangible goods; or fabricates, deploys plants, machinery or equipment to deliver goods.

Manufacturing, the guidelines said, was also considered to be firms that provide infrastructure to facilitate economic activity in the real sector, including those involved in the financial services industry.

According to the CBN, manufacturers include small and medium scale enterprises with an asset base (excluding land) of between N5 million and N500 million, with labour force of between 11 and 300.

The guidelines listed trading activities and services under the agricultural value chain (non-primary production), which should not be accommodated under the facility, to include long term loan for acquisition of plant and machinery and working capital.

To participate in the use of the facility, the CBN named all deposit money banks and development finance institutions, while borrowers were expected to satisfy the criteria spelt out as small and medium enterprises and/or manufacturer or a sole proprietorship.

The beneficiary must be a member of the relevant organised private sector group, such as the Manufacturers Association of Nigeria; Nigerian Association of Chambers of Commerce of Commerce, Industry, Mines and Agriculture; Nigerian Association of Small Scale Industrialists and Nigerian Association of Small and Medium Enterprises.
Loans taken under the facility would be administered at an all-in interest rate/charge of 9 per cent per annum payable on quarterly basis.

Specifically, the CBN would be entitled to earn 3 per cent as interest and the banks, a 6 per cent spread, with repayment amortise.

Loans would have a maximum tenor of 15 years, depending on the complexity of the project and shall terminate on December 31, 2030, with each project tenor determined in relation to its cash flow and life of the underlying collateral.

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