Government and institution measures in response to COVID-19

POSTED: 23rd Sep

The Central Bank of Nigeria has set out a number of measures to tackle the impact of the coronavirus, including establishing a fund to support the country's economy (of 50 billion naira; i.e. EUR 121 million), targeted at households and micro and small enterprises. The interest rate has also been cut, a moratorium has been announced on principal repayments for CBN intervention facilities and tax measures are being taken.

Economic stimulus measures (e.g. loans, moratorium on debt repayments…)

Monetary Policy

  • On 16 March, the Central Bank of Nigeria announced new measures:
  • A 1-year extension of a moratorium on principal repayments for CBN intervention facilities;
  • The reduction of the interest rate on intervention loans from 9 percent to 5 percent;
  • Strengthening of the Loan to Deposit ratio policy (i.e. stepped up enforcement of directive to extend more credit to the private sector)
  • Creation of NGN50 billion target credit facility for affected households and small and medium enterprises
  • Granting regulatory forbearance to banks to restructure terms of facilities in affected sectors
  • Improving FX supply to the CBN by directing oil companies and oil servicing companies to sell FX to the CBN rather than the Nigerian National Petroleum Corporation
  • Additional NGN100 billion intervention fund in healthcare loans to pharmaceutical companies and healthcare practitioners intending to expand/build capacity
  • Identification of few key local pharmaceutical companies that will be granted funding facilities to support the procurement of raw materials and equipment required to boost local drug production.
  • N1 trillion in loans to boost local manufacturing and production across critical sectors.
  • The CBN has adopted a unified exchange rate system for Inter-Bank and parallel market rates to ease pressure on FOREX earnings as oil prices continues to plummet.
  • CBN adopts the official rate of NGN360 to a dollar for International Money Transfer Operators rate to banks.
  • For on-lending facilities financial institutions have been directed to engage International development partners and negotiate concessions to ease the pains of the borrowers.
  • Provision of credit assistance for the health industry to meet the potential increase in demand for health services and products "by facilitating borrowing conditions for pharmaceutical companies, hospitals and practitioners".

Fiscal Policy

  • The crude oil benchmark price was also reduced from USD 57 to USD 30.
  • The Central Bank pledged to pump NGN 1.1 trillion (USD 3 billion) into critical sectors of the economy.
  • Commencement of a three month repayment moratorium for all TraderMoni, MarketMoni and FarmerMoni loans
  • Similar moratorium to be given to all Federal Government funded loans issued by the Bank of Industry, Bank of Agriculture and the Nigeria Export-Import Bank.

Read the full article via KPMG here. 

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