CBN approves initial N152bn release in real sector facility

The Central Bank of Nigeria (CBN) has approved an initial N152 billion loan under its newly set up N300 billion Real Sector Support Fund (RSSF) for disbursements to five projects, BusinessDay has gathered.

 

RSSF was established as part of the efforts to unlock the potential of the real sector to engender output growth, value added productivity and job creation and complements the CBN’s existing schemes and interventions in development agenda.

Details of the approved projects are not yet known, but the RSSF targets real sector activities in manufacturing, agricultural value chain and selected service sub-sectors.

The Facility specifically targets to support large enterprises for startups and expansion financing needs of N500 million up to a maximum of N10.0 billion.

According to the CBN, loans under the fund come at an all-in Interest rate/charge of nine percent per annum, payable on quarterly basis.

The CBN will be entitled to earn three percent as interest, while the banks the disbursing will get a six percent spread.

Repayments under this facility are amortised. As contained in the guidelines which are subject to review, the loans are supposed to have a maximum tenor of 15 years, depending on the complexity of the project and will terminate on 31st December, 2030. Each project tenor will be determined in relation to its cash flow and life of the underlying collateral.

The facility allows for moratorium of one year in the loan repayment schedule.

Ibrahim Muazu, Director Corporate Communications, CBN, confirmed last month that disbursements of the facility were yet to start, even though over 200 received applications were being reviewed at the time.

Set up in March, the facility is to improve access to finance by Nigerian SMEs to fast-track the development of the manufacturing, agricultural value chain and services sub-sectors of the Nigerian economy. Trading activities are not accommodated under the facility.

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

To qualify, a borrower must be an entity falling within the definition of an SME and/or manufacturer, and wholly owned and managed Nigerian private limited company registered under the Companies and Allied Matters Act of 1990.

It must also be a legal business operated as a sole proprietorship and be a member of the relevant Organised Private Sector Associations such as MAN, NASME, NACCIMA, NASSI e.t.c.

“The borrower shall utilise the funds granted under the facility for the purpose for which it was granted; insure the project being financed; adhere strictly to the terms and conditions of the facility; make the project and records available for inspection/verification by the CBN, as well as comply with the guidelines of the facility,” the CBN warned.