The Central Bank of Nigeria, CBN, has suspended application for new loans under it’s development finance intervention funds saying it “would be moving into more limited policy advisory roles that support economic growth.”
The banks through which the loans were disbursed are now responsible for recovery of loans granted so far under the development finance intervention funds.
This was contained in a circular to the Chief Executives of banks, signed by Ag. Director, Development Finance Department, Sa’ad Hamidu.
The CBN noted that the interest rates, as well as other terms and conditions on all existing facilities remain as contained in their respective approval letters.
Titled, “Suspension of Acceptance of New Applications under the Existing Central Bank of Nigeria, CBN Development Finance Intervention Programme”, the circular stated: “In furtherance of the Central Bank of Nigeria’s (CBN) new policy thrust focusing on its core mandate of ensuring price and monetary stability, the Bank has commenced its pull back from direct development financing interventions.
“Accordingly, the CBN would be moving into more limited policy advisory roles that support economic growth.
“In consideration of the above, the CBN wishes to inform you that it has stopped accepting new loan applications for processing under any of its existing intervention programmes and schemes.
“It is important that you communicate this to your customers and kindly note that the interest rates, as well as other terms and conditions on all existing facilities remain as contained therein their respective approval letters.
“You may also wish to note that your bank shall be responsible for the recovery of the outstanding balance on all facilities previously accessed through your bank.”
Investogist gathered that the apex bank had disbursed over N5.25 trillion to individuals and companies of various categories under several intervention programmes such as the ABP, the 100-for-100 Policy on Production and Productivity, the Nigerian Electricity Market Stabilisation Facility, N1.0 trillion Real Sector Facility, Agribusiness/Small and Medium Enterprise Investment Scheme (AGSMEIS) and Micro, Small and Medium Enterprise Development Fund (MSMEDF) amongst others.
The Bank funded export-oriented projects with a total of N44.58 billion under the Export Facilitation Initiative (EFI).
N745.31had been disbursed by the CBN under its Commercial Agriculture Credit Scheme (CACS) for 680 projects in agro-production and agro-processing, while total disbursements under the Agribusiness/Small and Medium Enterprise Investment Scheme (AGSMEIS) and Micro, Small, and Medium Enterprise Development Fund (MSMEDF) interventions stood at N150.22 billion and N96.08 billion, respectively.
Under the Healthcare Sector Intervention Facility (HSIF), a total of N135.56 billion was disbursed for 135 projects in the healthcare sector where 33 pharmaceuticals, 60 hospitals and 42 companies in other services benefited.
The CBN under the Real Sector Facility had disbursed a cumulative amount of N2.56 trillion to 462 projects across the country, comprising 257 manufacturing, 95 Agriculture, 97 services and 13 mining sector projects, as of May this year.
More than 4.6 million smallholder farmers had benefited from the Anchor Borrowers Programme under which a total of N1.09 trillion had been disbursed.
Under the Nigerian Electricity Market Stabilisation Facility (NEMSF-2) for capital, and operational expenditure of distribution companies (Discos), the Bank disbursed a total of N254.39 billion to ease liquidity constraints and support the recovery of legacy debt.
Speaking at the 2023 Bankers Dinner in Lagos, Cardoso stated that the CBN had “strayed from its core mandates.” He noted that in refocusing the CBN to its core mandate, there is a need to pull the CBN back from direct development finance interventions into more limited advisory roles that support economic growth.
“There was also a lack of clarity in the relationship between fiscal and monetary policies, among other challenges.
“Hitherto, the CBN had strayed from its core mandates and was engaged in quasi-fiscal activities that pumped over N10 trillion in the economy through almost different initiatives in sectors ranging from agriculture, aviation, power, youth and many others. These clearly distracted the Bank from achieving its own objectives and took it into areas where it clearly had limited expertise.
Ifunanya Ikueze is an Engineer, Safety Professional, Writer, Investor, Entrepreneur and Educator.