CBN has agreed to leave interest rates for its development finance activities or intervention funds at 5% per annum until March 2023 despite interest rate hike on Tuesday.
On Tuesday, the Central Bank of Nigeria (CBN) raised the benchmark interest rate to 13 percent, the first change in over two years.
According to the apex bank, the decision to raise the rate was on the back of rising inflation with stands at 16.8 per cent as at the end of April.
The new interest rate which will be used to fight inflation also means no more expensive loans for businesses.
Speaking to journalists after the MPC meeting, CBN Governor Godwin Emefiele said, “The MPC is of the view that rates on the development finance initiatives of the Bank should remain at 5 percent till March 2023.”
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The five percent annual interest rate paid by loan recipients is equivalent to a subsidy, as the loans were initially subject to a nine percent annual interest rate.
The sectors to benefit from these loans are agriculture, power, and aviation.
Others are Health, Power, Manufacturing sectors which CBN considers very critical to Nigeria’s economic growth.
Emefiele while reading the MPC communique also provided a breakdown of the loans disbursed to the sectors as follows:
He said, “Between April and May 2022, the Bank released the sum of N57.91 billion under the Anchor Borrowers’ Programme (ABP) to 185,972 new projects for the cultivation of rice, wheat, and maize, bringing the cumulative disbursement under the Programme to N1.01 trillion, disbursed to over 4.2 million smallholder farmers cultivating 21 commodities across the country.
“In addition, the Bank released N21.73 billion to finance seven (7) large-scale agricultural projects under the Commercial Agriculture Credit Scheme (CACS).
“The bank has so far spent about N741.05 billion for 674 projects in agro-production and agro-processing under its CACs scheme.
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“In the manufacturing sector, the Bank disbursed the sum of N436.85 billion to 34 new projects under the N1.0 trillion Real Sector Support Facility (RSSF).
“In the healthcare sector, the CBN disbursed N17.70 billion to four (4) healthcare projects under the Healthcare Sector Intervention Facility (HSIF), bringing the cumulative disbursements to N130.49 billion for 126 projects, comprising 58 hospitals, 31 pharmaceuticals, and 37 other healthcare services.
“Under the Micro, Small, and Medium Enterprises Development Fund (MSMEDF), the Bank disbursed N2.79 billion to support youths engaged at various nodes of the agricultural value chain, bringing the total disbursement under this intervention to N98.88 billion to 749 MSME projects across the country.
“In energy/infrastructure, the Bank released N15.71 billion to power sector players including generation companies (GenCos) and gas companies (GasCos), under the Nigeria Bulk Electricity Trading Plc – Payment Assurance Facility (NBETPAF), bringing the cumulative disbursement under the facility to N1.30 trillion.