The Central Bank of Nigeria (CBN) says it will support banks in the country to enable them to give loans to players in the agricultural and manufacturing sector at a single digit interest rate.
CBN’s director, banking and supervision, Ahmed Abdullahi, said this at the end of the CBN Bankers’ Committee meeting, in Lagos, Nigeria’s commercial city on Thursday, August 16.
Abdullahi said the loans will only be available for job creation and expansion plans.
The CBN director said: “The idea is to have job-creating activities in the economy and also to bring interest rates down within the economy”.
“Although agriculture and manufacturing are the initial sectors that are being considered, a bank can apply if there is a job-creating sector that the bank is operating in, it may be considered. The whole idea is: bring down interest rates, create jobs.
“For CRR refund, that is part of the idea. At the moment, banks funds are held under CRR and they are not being used.
“The idea came up that we can refund the CRR to a bank that has engaged in lending for a new project or for the expansion of an existing one in the agricultural or manufacturing sector as a way of utilizing the CRR.
“Anytime a bank lends to manufacturing or agricultural business at a rate that the CBN has prescribed, it will have its CRR refunded to it, up to the amount that it has lent.”
Commenting on the move, Yemisi Edun, executive director, finance at First City Monument Bank (FCMB), described the directive as a win-win situation.
“This is very positive for the economy and also positive for banks because the banks will be able to access these funds and be able to earn on it. It will be coming as single-digit rate then it will be positive for the economy.”
According to Segun Agbaje, managing director, Guaranty Trust Bank, the loans will be for seven years with a two-year moratorium.