CBN announces interest rate reduction, 5 other measures to mitigate the impact of COVID-19 in Nigeria

Governor Godwin Emefiele announces that Nigeria's central bank is keeping its benchmark interest rate on hold at 13 percent in Abuja, Nigeria, July 24, 2015. REUTERS/Afolabi Sotunde
  • CBN announces 6 policy measures to mitigate the impact of COVID-19 in Nigeria.
  • Godwin Emefiele, CBN governor, says interest rate of its intervention programmes has been cut to 5% from 9%.  
  • African countries announce several measures at combating the impact of coronavirus on the nation's economies, including closed borders, canceled flights, and imposed strict entry.

The Central Bank of Nigeria (CBN) has announced six initial policy measures to mitigate the impact of COVID-19 pandemic on the Nigerian economy.

Godwin Emefiele, the CBN governor, stated this on Monday, March 16th, 2020, while addressing journalists in Abuja, the nation's capital. He said the policies will provide support for Nigerians to cushion impact of coronavirus on businesses, economy, and the financial markets.

These measures include:

  • Extension of moratorium on loans

Nigerian banks will be allowed to restructure existing loans (e.g. from 6 months to 12 months) with lower interest rates as well.

  • Interest rate reduction

The CBN said interest rates on all CBN facilities cut from 9% to 5% per annum for 1 year effective March 1st, 2020. The loans are about N3 trillion, which the CBN through banks had provided to the Small and Medium Enterprises sector. The loans were given through the Commercial Credit Guarantee Scheme, and the Anchor Borrowers Programme, and other programmes.

  • Creation of N50 billion fund

The fund will be use to support SMEs of airlines, hotels, healthcare merchants, etc.

  • Credit support for healthcare sector

To support and meet demand for healthcare services/products, open loans to pharmaceuticals to expand production or build in Nigeria and to medicare facilities or hospitals

  • Regulatory forbearance

CBN also granted banks the permission to grant leave or forbearance on loans (both principal and interest) to agric, oil & gas, and manufacturing clients, done in a transparent and temporary, while maintaining stability of the financial system.

  • Strengthening of loan-to-deposit rate policy.

To further support industry funding levels to maintain bank's capacity to direct credit to individuals, households, and businesses. The apex bank encouraged banks to continue to build capital buffers to improve resilience of the sector.

Omotola Abimbola, a Fixed Income and Currency specialist, says the CBN measures are good for the business community and the economy at large

“CBN unveiling stimulus measures during the BoP (balance of payments) crisis. Good for the business community and the economy at large, but the Governor still failed to comprehensively address the elephant in the room”, he tweeted.

African countries on Sunday announced several measures at combating the impact of coronavirus on the nation's economies. Some closed borders, canceled flights and imposed strict entry and quarantine requirements to contain the spread of the new coronavirus, which has a foothold in 31 countries on the continent as at Monday.

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