CBN Offers Nigerians ₦5bn In ‘100 For 100 PPP Loan’ (See Details And Apply)
The Central Bank of Nigeria (CBN) has announced the introduction of a policy on production and productivity (PPP) to be known as 100 for 100 PPP.
The apex bank intends to provide funds for interested and qualified private companies who will be able to get as much as ₦5 billion under the scheme.
Though companies that can prove they have the capacity to effectively utilize above ₦5 billion would also be considered and funding made available to them but only based on the special approval of CBN’s Management.
The broad objective of the initiative is to reverse the nation’s over-reliance on imports, by creating an ecosystem that targets and supports projects with the potential to transform and catalyze the productive base of the economy.
According to information about the scheme, interest rate under the PPP intervention shall not be more than 5.0% p.a. (all-inclusive) up to 28th February 2022, thereafter, interest on the facility shall revert to 9% p.a. (all-inclusive) effective from 1st March 2022.
Also, the participating companies will roll over every 100 days meaning new organizations that are qualified will have the opportunity to enter into the scheme every 100 days (quarterly basis).
The CBN 100 for 100 PPP loan scheme is a financial instrument aimed at creating a smooth flow of finance and investments to enterprises with the potential to boost economic growth, accelerate structural transformation, promote diversification, and improve productivity.
- Long-term loan for acquisition of plant and machinery and Working Capital
- The Loan amount shall be a maximum of N5 billion per obligor. Any amount above N5 billion shall require the special approval of Management.
The Rate Of Interest
- Interest Rate under the intervention shall be at not more than 5.0% p.a. (all inclusive) up to 28th February 2022, thereafter, interest on the facility shall revert to 9% p.a. (all inclusive) effective from 1st March 2022.
Loan Tenor And Moratorium
- Term loans shall have a maximum tenor of ten (10) years depending on the complexity of the project, not exceeding 31st December 2031. Each project tenor shall be determined in relation to its cash flow and life span of the underlying collateral.
- Moratorium: Term loans shall have two (2) years moratorium.
- Working capital facility shall have a tenor of one (1) year with provision for roll over for a maximum of three (3) years.
- The participating financial institution (PFI) shall bear the credit risk.
- Refinancing of existing facilities allowed under the initiative, subject to Management’s approval.
How the CBN 100 for 100 PPP Loan works
- CBN would select 100 private companies who have projects with potential to significantly increase domestic production, reduce imports, increase non-oil exports, and economy growth.
- The system will be rolled over quarterly (every 100 days) and new qualified set of companies selected for financing.
- The initiative is funded from the CBN’s Real Sector Support Facility-Differentiated Cash Reserve Requirement (RSSF-DCRR) window (or any other funding window as may be determined by the central bank of Nigeria.
- The maximum loan amount is N5 billion per obligor.
- However, any amount above N5 billion shall require special approval from the CBN Management.
- Interests on monthly basis, on the fund shall be amortised and transferred quarterly with principal repayments to the Central Bank of Nigeria. Meanwhile, the interest rate under the intervention shall not be more than 5.0% p.a. (all-inclusive) up to 28th February 2022, thereafter, interest on the facility shall revert to 9% p.a. (all-inclusive) effective from 1st March 2022.
- The Central Bank would monitor the progress of the company.
- The CBN would set up comprehensive, regular monitoring of specific benchmarks and key performance indicators (KPIs) for selected companies.
CBN Offers Nigerians ₦5bn In 100 For 100 PPP Loan (See Details And Apply)
Which companies / organizations are eligible to apply?
Focal activities shall be existing businesses and projects (brownfield) with potential to transform and jumpstart the productive base of the economy such as:
- i. Manufacturing
ii. Agriculture and agro-processing
iii. Extractive Industries
iv. Petro-Chemicals and Renewable Energy
v. Healthcare and Pharmaceuticals
vi. Logistics Services and Trade-Related Infrastructure
vii. Any other activities as may be prescribed
Documents to be submitted to the CBN for evaluation
1. Financial statements
2. Certified true copies of company registration documents evidencing the incorporation of the Company with the Corporate Affairs Commission (CAC)
3. Three (3) years of audited financials, including the most recent management account of the company
4. Evidence of the company’s, promoters’, and directors’ creditworthiness
5. At least two (2) credit reports of the company and the directors;
6. Business plan of the underlying project for which the facility is to be applied
7. Detailed status report on project’s capacity utilisation, production output, productivity/efficiency level, employment level, export capacity, and value creation.
Major monitoring criteria/KPI expected by the CBN
A comprehensive, regular monitoring of specific benchmarks and key performance indicators (KPIs) under the initiative shall be undertaken regularly by the CBN.
The KPIs (specific and relevant) shall include:
i. Percentage increase in production output of financed companies;
ii. Percentage increase in capacity utilisation;
iii. Percentage increase in export volume and value;
iv. Percentage decrease in import volume and value of industrial raw materials;
v. Increase in number of jobs created.
How successful companies will be identified
Companies and successful beneficiaries would be published in National dailies for Nigerians to verify and confirm with details of facility granted, operating sector, manufacturing activities financed, and PFI.