Recently, the financial policy and regulation department of the Central Bank of Nigeria (CBN), in a circular announced the extension of the regulatory forbearance on its intervention facilities to Institutions impacted by the dampening economic effect of the lingering coronavirus pandemic for an additional year.
Though the country has exited recession according to the latest GDP report, the beneficiaries of these facilities still require regulatory support to completely get back to business before assuming the burden of servicing those facilities.
Earlier in 2020, the CBN had given the initial forbearance following the complete stall in economic activities brought about by the need to community transmission following the emergence of the coronavirus pandemic is nipped in the bud.
Consequently, the interest on the facilities was revised from 9.0% to 5.0%, with a one-year moratorium given on all principal repayments from 01 March 2020. Following the expiration of this forbearance, the CBN has announced the extension for another 12 months of the discounted interest rates for the CBN facilities. However, the rollover of the moratorium on these facilities will be considered on a case by case basis.
Since the emergence of the novel coronavirus, the monetary authority has continued to introduce measures to support economic recovery. The Bank has continued to extend support to industries that were hit by the negative effect of the coronavirus through the Anchor Borrowers’ Programme (ABP) Commodity Association, Private/Prime Anchors, State Governments, Maize Aggregation Scheme (MAS), and the Commercial Agricultural Credit Scheme (CACS), among others.
Yesterday, the CBN considering the impact of the economic frailties on the Nigerian poultries value chain and industries, released 50,000mtn of maize to cushion shortage of supply. Consequently, the price per metric tonne of maize has dropped to N180,000/metric tonne from N200,000/metric tonne, with an expectation that it would further plunge.
We acknowledge that farming activities have been significantly affected in 2020 due to covid-19 movement restrictions during the planting season as well as abnormal rainfall patterns which led to flooding of farmlands and the farmers/herders clashes which remain a significant threat to agricultural productivity.
These unfortunate events have led to a spike in food prices reflected in the food inflation rate of 20.57% in January 2021, according to the National Bureau of Statistics (NBS). Thus, we consider the provision of reliefs for farmers important to restore farming activities and output level back to pre-covid levels.
While we welcome these interventions given Nigeria’s current precarious economic situation, and how it has burdened businesses, we are of the view that the government needs to also keep an eye on resolving long-standing structural bottlenecks to truly maximise the full potential of Nigerian businesses.
