The Central Bank of Nigeria (CBN) has announced plans to lend to large companies in the country by buying Commercial Papers (CPs) issued by such firms.
Godwin Emefiele, CBN governor, who disclosed this at the end of the monetary policy committee meeting in Abuja on Tuesday, July 24, 2018, said the bank will be willing to buy if the papers are issued at single digits.
He said that the decision to invest in corporate organizations became necessary because Deposit Money Banks (DMBs) had frustrated past incentives by CBN aimed at encouraging them to lend to the real sectors of the economy.
He said that such CPs would be expected to come to the market at single-digit interest rates and for tenures, as long as, seven years.
“In this regard, the committee believed that a heterodox approach to reform the market in order to strengthen the flow of credit would be appropriate at this time.
“Consequently, credit constrained businesses, particularly the large corporations are encouraged to issue commercial paper to meet their credit needs and the Central Bank of Nigeria may if need be, buy those instruments to complement the efforts of the DMBs,” he said.
Recently, the Central Bank of Nigeria has agreed to provide about N575 billion to Africa's richest man, Aliko Dangote, debt financing for his Nigerian oil refinery project.
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