Industries which seek to refinance or restructure their operations can now access a maximum of N1 billion from the Central Bank of Nigeria’s (CBN) N500 billion industry revival funds.

CBN guidelines, issued a few days ago to the industry revival fund state: ‘Loan amount is a maximum of N1 billion for a single obligor in respect of refinancing/restructuring. The Fund shall be administered at an all-in Interest rate/charge of 7% per annum payable on quarterly basis. Specifically, the Managing Agent, Bank of Industry, BOI, shall be entitled to a 1% management fee and the banks, a 6% spread.’

Criteria for eligibility

To be eligible to access the fund, the CBN says: ‘A borrower shall be any entity falling within the definition of a small to medium enterprise and/or manufacturer; an entity wholly-owned and managed Nigerian private limited company registered under the Companies and Allied Matters Act of 1990.’

The guidelines specify that ‘any entity as defined above with an existing facility on the books of the participating banks can access the facility but emphasis will be on facilities that are indicating weakness arising from tenor, structure as well as facing cash flow difficulties.’

Objectives of bail-out funds

Objectives of the funds are to fast-track the development of the manufacturing sector of the economy by improving access to credit, improving the financial position of banks in the country, and increasing output. Other objectives include generation of employment, diversification of the revenue base, increasing foreign exchange earnings and provision of input for the industrial sector on a sustainable basis.

The loans shall have a maximum tenor of 15 years and or working capital facility of one year with provision for roll over. The fund also allows for moratorium in the loan repayment schedule.

All applications for refinancing/restructuring facilities can be made directly or by way of syndication, club arrangement or any other means involving two or more banks on the books of a bank. Within seven days of the receipt of the banks’ requests, BOI is expected to inform the banks of the status of their applications and also advise each bank on the amount of its facility that shall be refinanced under the Fund.

Source: Vanguard