In a strategic move to bolster key sectors of the economy, the Central Bank of Nigeria has launched a series of funding programs with a remarkable single-digit interest rate of 9% per annum. The Power/Aviation Fund aims to provide new loans and restructure existing ones in support of the Federal Government’s focus on power and aviation industries. Secured by an Irrevocable Standing Payment Order (ISPO), the term loans have a maximum tenor of 15 years, while working capital enjoys a one-year tenor with an option for annual renewal, capped at five years.
MarketForces Africa’s scrutiny revealed that a Bailout fund with a 20-year tenor initially at 7% per annum was extended at 9% per annum until March 2020. Due to the impact of the Covid-19 pandemic, the rate temporarily reduced to 5% until March 2021 and later extended to February 2023. Following an economic outlook review on August 17, 2022, the Central Bank mandated that all intervention facilities, effective July 20, 2022, would bear a 9% per annum interest rate.
The CBN PAS Fund, part of the Paddy Aggregation Scheme, targets Integrated Rice Millers and Large-Scale Aggregators with a single-digit interest rate of 9% per annum. This initiative aims to enhance national food security and aligns with the Federal Government’s National Food Security Programme (NFSP). The fund is disbursed to the Bank at 6% per annum.
Furthermore, the CBN 100 for 100 PPP, a policy on Production and Productivity, is geared toward stimulating investments in Nigeria’s manufacturing sector. With funds disbursed to the Bank at 2% per annum, enterprises benefit from a 9% per annum interest rate. Repayments are facilitated through Irrevocable Standing Payment Order (ISPO) deductions.
The Accelerated Agricultural Development Scheme (AADS) contributes to state-level agricultural development, disbursing funds to banks at 2% per annum. States, leveraging their comparative advantage, access the facility at a favorable 9% per annum interest rate. Repayments are structured through ISPO deductions.
This comprehensive suite of initiatives underscores the Central Bank’s commitment to fostering economic growth, encouraging investments, and ensuring sustainable development across vital sectors of the Nigerian economy.