The Central Bank of Nigeria (CBN) unveiled its Policy on Production and Productivity on November 7, 2021. ( the “New Policy”).
Beginning on November 1, 2021, the apex bank proposes to advertise, analyze, scrutinize, and financially assist 100 designated private sector enterprises during a 100-day period (the “Investment Cycle”). Each investment cycle will include a fresh group of 100 companies that have been selected for funding through the project.
The CBN would fund the program through its Real Sector Support Facility – Differentiated Cash Reserve Requirement (RSSF-DCRR) window or any other funding source it chooses.
Objectives of the CBN’s policy on Production and Productivity
- Increase local production and productivity.
- Increase non-oil exports.
- Catalyze import substitution of targeted commodities.
- Improve foreign exchange-earning capacity of the economy.
80% of the jobs created by such projects must be for Nigerians, and 50% of the project’s raw materials must be supplied locally.
The Facility
- Loan amount shall be a maximum of N5bn per obligor. Any amount above N5bn shall require the special approval of CBN’s management.
- Interest rate under the intervention would be at not more than five per cent per annum (all inclusive).
- Interest on the facility would revert to nine per cent p.a. (all inclusive) effective from March 1, 2022.
- The term loans would have a maximum tenor of 10 years depending on the complexity of the project, not exceeding December 31, 2031.
Requirements for consideration
- Brownfield: The projects for consideration shall be new projects in existing companies requiring new machinery and other support and must have the greatest potential to achieve significant scale in their in-country production and for domestic consumption and exports.
- Greenfield: New projects may be considered subject to the discretion of the CBN.
Manufacturing, agriculture, and agro-processing, extractive industries, petrochemicals, and renewable energy, or healthcare and pharmaceuticals must be among the project’s activities.
Other operations include logistical services and trade-related infrastructure including cold chain solutions and quality assurance infrastructure, as well as any other activities that the CBN may specify.
A highly satisfactory project should satisfy stipulated criteria by 81–100%; a satisfactory project should meet stipulated requirements by 61–80%; a less satisfactory project should meet stipulated requirements by 51–60%; and an unsatisfactory project should meet stipulated requirements by 0%–50%.
With complete documentation, interested enterprises with satisfactory performance must apply through their banks to the CBN department of development financing, office of the governor, Central Bank of Nigeria, central business district, Abuja.
Applicants shall notify the CBN of submitted applications via a dedicated online portal (https://100for100ppp.ng).
The New Policy is a good move and a step in the right direction for Nigerian firms. The CBN’s New Policy, we believe, will attract investments, stimulate local production growth, and ultimately strengthen the economy.
