By Gbadamosi oladimeji
The Central Bank of Nigeria (CBN) has debunked the rumours circulating around the social media terrain, that loan seekers are to pay extra charges on loans provided to caution the effects of COVID-19 on its customers.
This was made know on the latest report of CBN issued on the 13th of April, “The attention of the Central Bank of Nigeria (CBN) has again been drawn to false reports in the social media circles that loan seekers and owners of small-scale businesses who apply for loans provided to caution the effects of COVID-19 are required to pay a certain amount as application processing fee.”
“Similarly, for the avoidance of doubt, there are clearly spelt out procedures for accessing the N50 billion Targeted Credit Facility (TCF) stimulus package to support households and micro, small and medium enterprises (MSMEs) affected by the COVID-19 pandemic, which are disbursed through the NIRSAL Microfinance Bank (NMFB).”
According to the CBN, the objectives of the N50bn fund are to;
“Cushion the adverse effects of COVID-19 on households and MSMEs;
-support households and MSMEs whose economic activities have been significantly disrupted by the COVID-19 pandemic; and
-stimulate credit to MSMEs to expand their productive capacity through equipment upgrade, research and development.
-The guidelines further provide that those eligible for the funds will be households with verifiable evidence of livelihood adversely impacted by COVID-19, existing enterprises with verifiable evidence of business activities adversely affected as a result of the COVID-19 pandemic and enterprises with bankable plans to take advantage of opportunities arising from the COVID-19 pandemic.”
Notably, the scheme will be financed from the Micro, Small and Medium Enterprises Development Fund (MSMEDF) and will attract an interest rate of 5% per annum till 28 February 2021, after which the interest rate will be increased to 9% per annum.
The maximum loan amount will be N25m for SMEs and N3m for households. Tenor of the loan will be a maximum of 1 year for working capital loans and a maximum of 3 years for term loans with at least one year moratorium. The scheme will be done in partnership with NIRSAL Microfinance Bank (NMFB) and collateral requirement will be as acceptable by NIRSAL.
Other CBN policy to ease the pain of COVID-19 include;
” Extention of Moratorium :All CBN intervention facilities are hereby granted a further meatorium of one year on all principal, effective March 1, 2020.
This means that any intervention loan currently under moratorium are hereby granted additional period of one year. Accordingly, participating financial institutions are hereby directed to provide new amortization schedules for all beneficiaries.
2. Interest Rate Reductions:
Interest rates on all applicable CBN intervention facilities are hereby reduced from 9 to 5 percent per annum for 1 year effective March 1, 2020.
3. Creation of a N50 Billion Targeted credit facility :
The CBN hereby establishes a facility the NIRSAL microfinance Bank for house holds and small – and medium-sized enterprises (SMEs) that have been particularly hard hit by COVID-19, including but not limited to hoteliers, airline service providers, health care merchants.
4.Credit support for Healthcare Industry:
To meet potential increase in demand for healthcare service and products, the CBN hereby opens for its intervention facilities, loans to pharmaceutical companies intending to expand/open their drug manufacturing plants in Nigeria, as well as to hospital and Healthcare practitioners who intend to expand/build the health facilities to first class centre’s.
5.Regulatory Forbearance:
The CBN hereby grants all Deposit money Banks leave to consider temporary and time-limited restructuring of the tenor and loan terms for businesses and households most affected by the outbreak of COVID-19 particularly oil and Gas, Agriculture, and manufacturing.
6.Strengthening of the CBN LDR Policy:
the CBN would further support industry funding levels to maintain DMBs capacity to direct credit to individuals, household, and business.”
COVID-19, otherwise known as the Wuhan coronavirus, is a novel respiratory disease which originated late 2019 in Wuhan, a city in the Wube Province of China but has since become a global pandemic recognised as such by the premier global health body, the World Health Organization [WHO].
The global impact of COVID-19 in terms of unprecedented stress on healthcare infrastructures of many countries, has caused enormous damage to the economies of most countries in the world, arising from work stoppage, suspension of travel and trades, tanking of major equity, financial and commodity markets and costly emergency measures and spending which every country has had to undertake in the wake of the pandemic and it’s cascade of attendant crises.
In addition to fiscal measures adopted by the various governments, financial authorities in most countries and internationally, including the global financial institutions such as the IMF, the AfDP and the World Bank as well as central banks across world over have taken expansionary monetary measures to try stimulate or at a minimum, keep their domestic economies on critical life supports.
The Central Bank of Nigeria is not left behind, the recent torrent of policy measures for direct interventions in the Nigerian economy being part of the concerted response to the debilitating effects of pandemic on the Nigerian economic which had earlier been dealt a serious blow by the precipitous crash in global crude oil prices before the pandemic came along as if to finish the knockout job.
The CBN also warned members of the public, particularly households and owners of small-scale businesses, are therefore advised to disregard any message requiring them to pay any amount to process their applications.
However Prospective applicants are advised to approach NIRSAL Microfinance Bank or the CBN branch nearest to them for clarification on the procedure for accessing any of the CBN-related loans. Any observed irregularities should be reported to the Consumer Protection Department of the CBN via cpd@cbn.gov.ng or call 07002255226.
