List of CBN’s Single Digit Interest Rate Loans for Businesses
The Central Bank of Nigeria (CBN) has a number of cheap loans for companies operating across various sectors of the economy. These loans are usually cheap when compared with the average lending rate from commercial banks.
To make the loan accessible to interested companies and entrepreneurs, the loans have always been channelled through banks. Commercial banks are obligated to disburse the loans at a single interest rate cap of 9% to target sectors through an on-lending arrangement.
FGN Intervention fund. This represents funds for states in the Federation that are having challenges in meeting their domestic obligation including payment of salaries. The loan was routed through some Nigerian Banks for an on-lending to the states. The Bailout fund is for a tenor of 20 years at 9% per annum
The Real Sector Support Facility (RSSF): The Central Bank of Nigeria, as part of the efforts to unlock the potential of the real sector to engender output growth, productivity and job creation established a N300 billion Real Sector Support Facility (RSSF).
The facility is disbursed to large enterprises and startups with financing needs of N500 million up to a maximum of N10.0 billion. The activities targeted by the Facility are manufacturing, agricultural value chain and selected service sub-sectors. The funds are received from the CBN at 2% per annum and disbursed at 9% per annum to the beneficiary.
Commercial Sector Agriculture Credit Scheme: The fund received under the Central Bank of Nigeria (CBN) Commercial Agriculture Credit Scheme represents a credit line granted to Banks for the purpose of providing concessionary funding to the agricultural sector.
The facility costs banks 2% per annum and the local lenders are under obligation to on-lend to customers at an all-in interest rate of not more than 9% per annum. Based on the facility’s structure, the Banks assume the default risk of all amounts lent to the Bank’s customers. This facility is not usually secured.
The Central Bank of Nigeria (CBN) / Bank of Industry (B0I) – SME / Manufacturing Intervention Fund represents an intervention credit granted to the Banks for the purpose of refinancing/restructuring existing loans to Small and Medium Scale Enterprises (SMEs) and Manufacturing Companies.
The total facility is secured by Nigerian Government Securities. A management fee of 1% per annum is deductible at source and Banks are under obligation to on-lend to customers at an all-in interest rate of 7% per annum. The Bank is the primary obligor to CBN / BOI and assumes the risk of default.
Non-oil Export Stimulation Facility (NESF): This Facility was established by the Central Bank of Nigeria to diversify the economy away from the oil sector, after the fall in crude prices.
The Central Bank invested N500 billion in debenture, issued by the Nigerian Export-Import Bank (NEXIM). The facility disbursed per customer shall not exceed 70% of the total cost of the project, or subject to a maximum of N5 billion.
Funds disbursed to the Bank from CBN are at a cost of 2% which are then disbursed to qualifying customers at the rate of 9% per annum.
POWER/AVIATION FUND: The purpose of granting new loans and refinancing/restructuring existing loans to companies in the power and aviation industries is to support the Federal Government’s focus on the sectors.
The facility is secured by Irrevocable Standing Payment Order (ISPO). The maximum tenor for term loans under the programme is 15 years while the tenor for working capital is one year, with an option to renew the facility annually subject to a maximum tenor of five years.
The facility attracts an interest rate of 2% per annum payable quarterly in arrears and the Bank is under obligation to on-lend to customers at an all-in interest rate of 9% per annum. This facility is not secured.
MarketForces Africa’s review of some banks’ books showed that the Bailout fund is for a tenor of 20 years at 7% per annum and availed for the same tenor at 9% per annum until March 2020, the rate was reduced to 5% for 1 year period due to Covid 19 pandemic to March 2021 after which it was extended to February 2023.
CBN on August 17 2022 further reviewed the rates in response to the economic outlook and approved the following order:
• All intervention facilities granted effective July 20, 2022, shall be at 9% per annum while all existing intervention facilities granted prior to July 20, 2022 shall be at 9% per annum effective September 1, 2022.
CBN PAS FUND – The Paddy Aggregation Scheme (PAS) is for Integrated Rice Millers and Large-Scale Aggregators to enable them to purchase home-grown rice paddy at a single-digit interest rate to promote the Federal Government of Nigeria’s National Food Security Programme (NFSP).
It is to provide credit facilities to Integrated Rice Millers and Large-scale rice paddy aggregators at single-digit interest rates to increase local production of rice towards effecting lower prices and enhancing national food security..
The fund is disbursed to the Bank at 6% per annum. Each enterprise is availed of the facility at 9% per annum and repayments are made via ISPO deductions.
CBN 100 for 100 PPP – (Policy on Production and Productivity) was established by the Central Bank of Nigeria to stimulate investments in Nigeria’s manufacturing sector with the core objective of boosting production and productivity necessary to transform and catalyse the productive base of the economy. The fund is disbursed to the Bank at 2% per annum.
Each enterprise is availed of the facility at 9% per annum and repayments are made via ISPO deductions.
Accelerated Agricultural Development Scheme (AADS) was established by the Central Bank of Nigeria to help states develop at least 2 crops/agricultural commodities in which they have a comparative advantage. The fund is disbursed to Banks at 2% per annum. Each state is availed the facility at 9% per annum and repayments are made via ISPO deductions #List of CBN’s Single Digit Interest Rate Loans for Businesses Futureview US Dollar Fund Return Hits 7.42%