As part of efforts to boost activities in the non-oil sector of the economy, the Central Bank of Nigeria (CBN) yesterday unveiled a N500 billion low interest rate non-oil export facility.
The banking sector regulator in the guidelines of the: “The Non-Oil Export Stimulation Facility (ESF), said the fund was established to support the diversification of the the economy away from oil and to expedite the growth and development of the non-oil export sector.
According to the guidelines for operating the fund,the CBN will invest in a N500 billion debenture to be issued by Nigerian Export-Import Bank (NEXIM) in line with section 31 of CBN Act.
It further stated that thefacility was essentially designed to redress the declining export credit and reposition the sector to increase its contribution to revenue generation and economic development. It will improve export financing, increase access of exporters to low interest credit and offer additional opportunities for them to upscale and expand their businesses in addition to improving their competiveness.
The Nigerian Export – Import Bank (NEXIM) shall be the Managing Agent of the Non-Oil Export Stimulation Facility (ESF). It shall be responsible for the day-to-day administration of the Facility and rendition of periodic reports on the performance of ESF to CBN.
“Facilities with a tenor of up to three (3) years, would be granted at a maximum all-in interest rate of seven and half percent (7.5%) per annum; Facilities with tenor of over three (3) years, would be granted at a maximum all-in interest rate of nine percent (9%) per annum.
“Export of goods wholly or partly processed or manufactured in Nigeria; Export of commodities and services, which are permissible and excluded under existing export prohibition list; Imports of plant and machinery, spare parts and packaging materials, required for export oriented production that cannot be produced locally; Export value chain support services such as transportation, warehousing and quality assurance infrastructure; Resuscitation, expansion, modernization and technology upgrade of non-oil exports industries and; Stocking Facility/Working capital,” the guidelines added.
Furthermore, it stated that the facility shall not exceed 70 percent of the total cost of the project or transaction subject to a maximum of N5 billion. The ESF shall have a tenor of up to 10 years and shall not exceed the 28th of December, 2025. Stocking facility shall be for a maximum tenor of one year with the option of roll-over not exceeding twice. However, this shall attract an additional fee of 0.25 percent per annum of the loan amount and is subject to approval of CBN. Working capital facility shall be for a maximum tenor of one year with the provision of roll-over not exceeding twice. However, this shall attract an additional fee of 0.25 percent per annum of the loan amount and is subject to approval of CBN.
Meanwhile, in a separate circular yesterday, the central bank stated that in other to ensure continuous flow of credit to the export sector at competitive rates, especially against the background of declining export loans and the need to promote sustainable non-oil exports, it has expanded the Export Credit Rediscounting and Refinancing Facilities (RRF) by N50 billion to support the banks in the provision of pre- and post-shipment finance to exporters to undertake export transactions.
To implement the facility, CBN will invest in a N50 billion debenture to be issued by the Nigerian Export – Import Bank (NEXIM) in line with Section 31 of CBN Act. Accordingly, this guideline describes and outlines the revised operational modalities of the RRF towards the provision of a discount window to liquefy the export credit transactions of Deposit Money Banks, thereby improving exporters’ access to export credit at any given time.
According to the CBN, the objectives of the RRF objectives are: to encourage and support banks to provide short-term pre- and post-shipment finance in support of exports by providing a discount window to exports financing banks and therefore improving their liquidity and exporters’ access to export credit; moderation and indirect influence on the cost of export credits to the non-oil sector in order to enhance competitiveness of Nigeria’s exports and thereby assist in export production and marketing; and to enhance the continuous flow of export credits for non-oil exports toward facilitating the diversification of the productive base of the economy and ensuring sustainable external sector development;
Commenting further on the pre-shipment rediscounting facility, it stated: “The objective is to encourage banks to finance incidental expenses necessary to undertake and perform export contracts as well as procurement of inputs / exportable goods, e.g. raw materials / commodities, semi-processed and finished goods for either processing and/or direct exports.”