ga('send', 'pageview');

Dissecting the CBN’s Real Sector Support Facility Guidelines

By United Capital Research

Earlier, the Central Bank of Nigeria (CBN) released the guideline for accessing the Real Sector Support Facility (RSSF) with the objective of stimulating real sector growth.

The facility, which is restricted to a maximum of N10 billion per project, is divided into; Differentiated Cash Reserves Requirements (DCRR) Regime and Corporate Bonds (CB) Funding Programme.

The DCRR facility would allow Banks to access part of their CRR deposits kept with the CBN, in providing credit financing to greenfield (new) and brownfield (expansion) projects in the real sector (particularly Agriculture, Manufacturing and other growth & employment stimulating sectors) for a minimum of 7-years at maximum interest rate of 9 percent and with a 2-year moratorium.

ALSO READ  Dangote Sugar: Price Hikes Sweeten Earnings

On the other hand, the CBs funding facility allows the CBN to invest, alongside the public, in CBs issued by large/triple-A rated corporates for a minimum tenor of 7-years subject to the intensified transparency requirements for Triple A-rated entities.

Notably, the applicable interest rates for CBN to buy CBs appears unclear, however, our enquiry with an official of the CBN confirmed to us that the 9 percent interest rate is applicable.

ALSO READ  FY17: Unilever Nigeria EPS to Grow 94.7% to N1.58k—Analyst

Also, given the fact that investment risks of each project still lie with the banks, we suspect that banks may be reluctant to tap into the DCRR regime due to their weak appetite for risks.

Overall, a successful implementation of the programme will be positive for the faster recovery in the broader economy.

ALSO READ  NSE Signs Deal to Broadcast Stock Market Activities Live on TVC

Related Articles

Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan.

more recommended stories

%d bloggers like this: