CBN’s Interventions and Dearth of Credit Facilities for Local Businesses

The Central Bank of Nigeria (CBN) remains one of the busiest apex banks in the world when it comes to announcing one financial intervention after another. The bank is also quick to announce huge amounts of money for various sectors of the country’s economy. But most of the targeted beneficiaries still lament that they hardly get the funds, thereby defeating the essence of such financial interventions. JOHNMARK UKOKO examines why local businessmen still lament lack of long-term single digits credit facilities in spite of CBN’s various intervention through credit schemes.

In response to requests by local businesses for long-term single digit credit facilities in the country, the Central Bank of Nigeria (CBN) had often announced various financial intervention programmes for several sectors of the economy.

For instance, in the last two decades of the country’s democratic experience, the bank had intervened in sectors such as textile, aviation, banking, manufacturing, vehicle assembly plants, insurance, as well as Small and Medium Enterprises (SMEs), among others.

Also, the entertainment, media, telecommunications, agriculture, transportation and other sectors have been promised various amounts to cater for their need for long-term credit facilities.

Development banks like Bank of Agriculture (BoA), Bank of industry (BOI) and lately, the Development Bank of Nigeria (DBN) were mandated to disburse and manage various intervention funds in the past.

Sectors such as textile, leather and footwear and entertainment were promised some huge amounts during former President Goodluck Jonathan’s administration, while President Muhammadu Buhari’s administration also directed the CBN to give grants and credit facilities to the agriculture sector.

Specifically, CBN’s Anchor Borrowers Programme readily comes to mind as rice, poultry, cattle and fish farmers and a host of other farming sectors have not been left out in provision of credit facilities.

To cushion the impact of the COVID-19 pandemic on the country’s economy, the apex bank also rolled out various intervention amounts to the concerned sectors.

Recently CBN announced that the total credit to the country’s business rose from N19.4 trillion to N23.5 trillion in the last one year, representing a 21.1 per cent increase.

The CBN state of the economy and financial sector report endorsed by its Governor Godwin Emefiele, listed agriculture, manufacturing, healthcare and power to have taken a larger chunk of the funds.

Emefiele said that working with fiscal authorities, the CBN targeted N50 billion credit facility for affected Small and Medium Enterprises (SMEs) and affected households across the country.

Additionally, CBN also mobilised key stakeholders in the Nigerian economy under the Private Sector Coalition Against COVID-19 pooled N39.646 billion to support the fight against the COVID-19 pandemic.

It equally announced a whooping N1 trillion facility in loans to boost local manufacturing and production across critical sectors of which 53 major manufacturing projects, 21 agriculture-related projects and 13 service projects are being funded. It provided another N100 billion intervention fund for pharmaceutical companies and the healthcare sector.

“We have increased the fund to N200 billion to accommodate more players in the healthcare sector, such as phytomedicine practitioners and manufacturers of medical devices and vaccines.

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“Our primary focus is to create a hub where medical officers can have access to diagnostics equipment to carry out quality medical services at an affordable price for Nigerians,” Emefiele assured.

CBN data also showed so far N107.7 billion has been released to support 114 healthcare projects, including six green fields, just as Emefiele added that some of the projects financed included cancer treatment centres, medical diagnostics, pharmaceuticals, dental services, eye clinics and other healthcare services providers.

“We are happy that the intervention programmes have contributed to increased bed spaces in our hospitals and improved healthcare productivity as evident in the increased number of successfully treated COVID-19 patients.

“These development initiatives, combined with our monetary and financial policies, have helped to support the recovery of our economy and in realigning general macroeconomic conditions.

“CBN worked with the fiscal authorities in instituting strong policy support measures capped under the Economic Sustainability Plan (ESP), which was put in place to contain the COVID-19 pandemic and to lift our economy out of the woods through massive intervention to critical sectors.

However, while Emefiele celebrates the success of CBN’s intervention efforts, the same can not be said for the manufacturing sector.

Addressing journalists recently in Lagos, Managing Director/Chief Executive Officer of NIPSO Porcelain Company Limited, Mallinson Adam Ukatu, said he was unaware of the local firms that benefited from CBN’s many intervention schemes.

Ukatu, who said although he usually read about the interventions of the CBN in the newspapers, he has not been fortunate to benefit from the credit facilities, stressed that scarcity of cheap long-term credit facilities had been one major headache of local businessmen.

He said he had been struggling to know the beneficiaries of the various CBN’s financial interventions, adding that each time he applied for such facilities, his firm had not been able to access the funds.

Ukatu, who is also Chairman of Non-Metallic Products Sector Group of the Manufacturers Association of Nigeria (MAN), stated that lack of long-term credit facility at a single digits rate remained the bane of local businesses in the country.

“Now and then I do read of the CBN’s intervention facilities. I am sorry to say I don’t know the lucky companies getting the interventions. I have applied to the Bank of Industry (BOI) on many occasions without success.

“I don’t know what it takes to benefit from the intervention funds I read about in the newspapers. Each time I need credit facilities I only depend on the commercial banks, whose interest rates are in three digits,” he stated.

Ukatu said local manufacturers are going through tough times to access credit facilities and appealed to the Federal Government to change its approach of resolving the issue.

He opined that BOI, DBN and BoA, which are the three local development banks in the country, have not been able to tackle the scarcity of cheap long-term credit facility challenges confronting local businesses.

Respondents commended the Federal Government and the CBN for packaging financial intervention funds for the troubled sectors of the economy, and advised the government to ensure strict supervision of the disbursement of its intervention funds.

They urged the CBN to rejig how the funds are disbursed to ensure that they go to genuine businessmen and women, as against politicians and people close to the corridor of power.

They also appealed to the CBN to ensure that BOI, DBN and BOA were fair and equitable in the approval of loans for the players in the sectors that receive the intervention funds.

The question most Nigerians are asking is: Which firms benefited from CBN’s N23.5 trillion credit facilities?

Only the performance of the economy will prove the resourcefulness of CBN’s interventions in the months and years ahead.