* 40 power projects valued at N140.442bn
*16 airline projects valued at N120.762bn
*N15.77bn disbursed to 76,251 smallholder farmers
Central Bank of Nigeria has in the last seven years injected about N2 trillion into the economy in its various intervention schemes. The interventions funded about 1,686 projects which have created a total of 6.2 million jobs in agriculture, industry and aviation among others. An industry report on CBN interventions sighted by Financial Vanguard showed that the interventions of the CBN into the economy were directed at diversifying the economy, job creation and promotion of inclusive growth.
According to the report the “CBN’s N200 billion Commercial Agriculture Credit Scheme (CACS) was established by the apex bank to fast track the development of the Nigerian economy by providing credit facilities to commercial agricultural enterprises at a single digit interest rate as well as enhance national food security, increase output, generate employment and diversify the revenue base which is in line the government bid to diversify the economy”.
According to the report, “banks in the country were granted facilities to be disbursed to clients, both private and state government, at a maximum interest rate of 9.0 per cent in which the CBN earns two per cent as interest from the 9 per cent maximum interest rate charged. N200 billion used for the financing was a Bond issued with a seven years tenor, floated by the Debt Management Officer (DMO)”. Financial Vanguard gathered that the scheme “was initially meant to terminate in September this year but because of its success it has been extended to September 2025”.
It added that “so far the sum of N373.73 billion has been disbursed in favour of 460 projects, contributing to the creation of 1,132,260 jobs along the various agricultural value chains”, the report observed. The report noted “the quest by Nigerians for cheap imported goods, underutilisation of installed capacity due to inadequate raw materials as a result of low agricultural productivity, infrastructural constraints transport and electricity which are increasing the cost of production of economic operators in the country”. On CBN intervention funding, the report said that the apex bank “set up the N200 billion Small and Medium Enterprises Restructuring and Refinancing Facility (SMERRF) with the aim to refinance and restructure banks exiting problematic loan portfolios to manufacturers to improve access to finance as well as improve the financial position of banks”.
The fund it was learnt was “administered at seven per cent per annum payable on quarterly basis. The managing agent the report said is the Bank of Industry BOI that is entitled to one per cent management fee and the banks, a spread of 6 per cent. Loans granted under this scheme have a maximum tenor of 15 years and or working capital facility of one year with provision for roll over. Although the scheme has been discontinued, repayment is still ongoing and a total of N381.99 billion was disbursed to 604 projects. The success of the scheme was that it contributed to the creation of 89,860 direct jobs, increased productivity and turnover of firms, restoration of 905 MW of electricity to the National grid and N6.9 billion estimated as interest savings to project promoters that benefited from it”.
According to the industry report on the intervention funding of the CBN, “the Power and Airline Intervention Fund PAIF, particularly drew the attention of government as it revealed that without the CBN’s intervention in the sector many of the domestic airlines and power sector projects would have close shop. The Scheme the report noted “is to stimulate and sustain private sector investment in the power and airline sectors as well as fast track development in both sectors of the economy. It is administered at a rate of not more than seven per cent per annum. The managing agent of the fund is BOI that is entitled to a one per cent charged at 9 per cent the facility was accessed.
“The source of fund for the intervention is a N300 billion debentures issued by Bank of Industry (BOI) that is expected to terminate by 2025”. So far the report said “the intervention fund has financed 40 power projects valued at N140.442 billion; 16 airline projects valued at N120.762 billion. Through the scheme also 840 MW of power has been generated and 120 km of gas pipeline constructed. The intervention has also enabled resuscitation of fleet of aircrafts of some ailing airlines, captive and embedded power projects to complement the national grid”.
A further study of the CBN intervention funding by the report showed that the “N220billion Micro Small and Medium Enterprises Development Fund (MSMEDF) was set up by the apex bank to enhance access by MSMEs to financial services; increase in productivity and output of micro enterprises; increase in employment and creation of wealth; and to engender inclusive growth”. The scheme the report said “has funded 478 projects valued at N74.797 billion”. Another of the intervention of the CBN in the economy in its developmental role is “the N300 billion real sector support fund (RSSF). The fund was established to stimulate output growth, enhance value addition and engender productivity in the economy. The facility concentrated on increasing credit to priority sectors of the economy with sufficient employment capabilities, high growth potentials, and increase accretion to foreign reserves, expansion of the industrial base and consequently diversification of the economy. It is given out at an interest rate of 9 per cent. Four projects has benefited from the fund valued at N4.6 billion, which have contributed to the creation of 17,000 direct and indirect jobs” the report noted.
According to industry report “the one programme that has endeared the CBN intervention to the current administration is the Anchor Borrowers Programme (ABP). This it was gathered has enabled “farmers in Kebbi state to grow rice that when harvested could bring down the current high price of rice in the country”. It was also gathered that government is happy that 26 other states have keyed into the scheme that could enable the government meet its self sufficiency in rice production come next year. The scheme the report said is “designed to create an ecosystem that links Small holders’ farmers to local processors; improve productivity in identified commodities with high domestic production potentials; and also build capacity of Small Holder Farmers. The fund from the scheme is administered at 2 per cent per annum for on-going lending to beneficiaries at 9 per cent. A total of N15.77 billion has been disbursed to 76,251 small holder farmers through five private anchors in three states, while 26 other states have expressed participation under wet season farming.
The report further stated: “The N50 billion Textile Intervention Facility was a one-off special intervention with a seed fund of N50 billion to resuscitate the textiles industry in Nigeria. The facility it said was used to “restructure existing loans and provision of additional credit to cotton, textiles and garment (CTG) companies in Nigeria as part of its efforts to promote the development of the textile and garment sector. It was Long term loans fore acquisition of plant and machinery with an all-inclusive rate of 4.5 per cent; 3.5 per cent; to CBN and 1.0 per cent BOI. The Fund is managed by BOI”.
Financial Vanguard gathered from the report that the Youth Empowerment Development Programme (YEDP) is yet another of the CBN intervention in the economy “to assist in job creation and the development of entrepreneurial skills among Nigerian graduates. The scheme was established to improve access to finance by youths to develop their entrepreneurial skills using a well-structured business model; stimulate job creation through the development of small and medium enterprises among Nigerian youths; harness the entrepreneurial capacity of Nigerian youths; and increase the contribution of non-oil sector to the nation’s GDP.
“The collateral required here are the NYSC certificate, Tertiary Institutions Certification and 3rd party Guarantors. Registration of collaterals (movables) and financed equipment with the national collateral registry. Loans are given at nine per cent interest rate all-inclusive. The scheme has received 1, 000 applications and about 3,000 processed by lending banks. 1,211 prospective entrepreneurs trained nationwide in 1st training outing”.
The various CBN interventions have funded the industrial sectors to a large
extent with affordable long term finances as well as created jobs. There is also increase in the level of credit to the agricultural sector to over 3 per cent from 1.3 per cent in 2010 as a result of the interventions.
The CBN has been involved in development financing since 1962. Policies effected were focused on improving access to credit by preferred sectors agriculture, manufacturing, MSMEs, and infrastructure as well as the establishment and strengthening of development finance institutions. These included commercial bill financing scheme (1962), Bank of Industry 1964, formerly Nigeria Industrial Development Bank, regional commodity boards later called national commodity boards, 1977, Rural Banking Programme 1977; Agricultural Credit Guarantee Scheme 1978; export financing and rediscount facility 1987.
Others were the Bank of Agriculture formerly Nigeria Agricultural and Co- operative Bank Ltd 1972; Export Guarantee Scheme 1987; People’s Bank 1989; Community Banking 1990, Export Rediscounting and Refinancing Facility 1991; Sectoral Allocation of Credit & Concessional Interest 1996, Small and Medium Industry Equity Investment Scheme 2001 and Agricultural Credit Support Scheme 2006.
In 2009 there was a paradigm shift on the use of the Bank’s interventions. It is now being used as an instrument to achieve growth objectives such as the quantitative easing policy in 2010 to address the “persisting tight credit conditions and the continuing under-performance of key monetary aggregates”. The twin main focus of the interventions became stimulating growth through the development of identified weak private sector and strengthening of the financial system. The policies are not only sectoral, they also supports the financing of specific industry in the medium to long term at single digit interest rate.
