Coronavirus: CBN Creates N50bn Fund, Cuts Interest Rates to 5%
The Central Bank of Nigeria has announced its first set of policies to cushion the negative impact the deadly coronavirus on Nigerian businesses and economy.
The CBN governor, Godwin Emefiele, announced in Abuja that the interventions included the creation of an N50 billion targeted credit facility for small and medium scale enterprises as well as households impacted by the COVID-19 pandemic.
He also disclosed of immediate cut on interest rates of all applicable CBN intervention facilities from nine per cent to five percent per annum for one year, effective March 1.
The CBN said it has about N3 trillion under various intervention programmes it operates through the various deposit money banks.
They include the Anchor Borrowers, Commercial Agricultural Credits Scheme, Micro-Small and Medium-scale Enterprise, or Agri-Business/Small and Medium Enterprise Investment Scheme (AGSMEIS) programmes.
With the breakout of COVID-19, the CBN said it expects that the ability of companies to repay the loans received under the various parogrammes would be impaired.
Consequently, the cut in the interest rate payable on such loans, the CBN governor explained, would give the businesses a breather to settle their financial obligations and help them continue to grow their businesses.
The apex bank also announced a further extension of the period of grace given for the repayment of the loans by one year on all principal facilities, particularly intervention loans, effective March 1, 2020.
Accordingly, the CBN governor directed participating financial institutions to provide new amortization schedules for all beneficiaries to repay.
In addition, the CBN, through the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) Microfinance Bank for households, micro, small- and medium-sIzed enterprises (SMES) that have been particularly hard hit by Covid-19.
The support, the apex bank, said also extends to hoteliers, airline service providers, health care merchants among others.
The US Federal Reserve, on Sunday, announced that it has cut interest rates to near-zero to combat the economic impact of the coronavirus.