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COVID-19: CBN moves to tackle OPS’s borrowing challenges

Piqued by criticisms from members of the organised private sector (OPS) over the attitude of Nigerian banks in terms of lending, the Central Bank of Nigeria (CBN) has requested private sector operators to make submission on challenges facing their businesses.

New Telegraph learnt in a memo sent to the Lagos Chamber of Commerce and Industry (LCCI) by the management of the CBN where the apex bank was quoted to have resolved to support the private sector in the area of lending to the manufacturing sector.

Particularly, the memo revealed that CBN Governor, Godwin Emefiele, was not happy with the frosty relationship between the OPS and commercial banks with regard to lending to the private sector.
He said that the management of CBN had to reach out to the banks to encourage them to offer and disburse these funds (intervention funds) to those priority sectors of the economy so as to stimulate aggregate demand and create more jobs.

This, according to him, is in line with Federal Government’s resolve to maintain the core of its spending plans for 2020 as this remains vital for the attainment of the much-needed economic recovery.
The CBN governor expressed support for the sustenance of the broad-based stimulus and liquidity facilities being provided to curb the adverse effects of the shocks as he commended the bank’s effort on the recent measures put in place to mitigate the economic impact of the twin shocks on the Nigerian economy.

New Telegraph learnt from the CBN memo, which the LCCI’s Director-General, Dr. Muda Yusuf, sent to members of the Chambers that the apex bank was requesting that private sector operators forward their areas of concerns to it.

Yusuf explained that the concerns include bank charges, interest rates, processes, forex, credit, among others.
However, the LCCI DG put the deadline for submission for members at Tuesday June 16, 2020.
He said: “The CBN has requested the LCCI to make a submission on challenges faced by businesses in banking relationships. These may include bank charges, interest rates, processes, forex, credit etc.
“Deadline is close of work on Tuesday June 16.”

It will be recalled that out of the CBN’s approved N1trillion intervention targeted at agriculture and manufacturing firms, the apex bank disbursed N93.2 billion under the real sector support fund to boost local manufacturing and production across critical sectors.
This consisted of over 44 greenfield and brownfield projects.

The apex bank has also approved N10.9 billion to 14,331 beneficiaries under the N50 billion targeted credit facility for households and SME’s, out of which N4.1billion has been disbursed to 5,868 successful beneficiaries.
But the LCCI director general emphasised that there was need for the apex bank to undertake periodic impact assessment of the fund and publish the status of implementation, disbursements, number of beneficiaries and general impact of the funds and also charging the commercial banks to take a cue from the CBN in the promotion of economic development goals.

Similarly, findings by the apex bank revealed that most of the commercial banks were not lending its N60 billion of the five per cent contribution from their annual profits to the SMEs for reasons best known to them.
Basically, the contribution from the lenders followed CBN’s directive to banks to contribute five per cent of their annual profits for on lending to SMEs, which has so far yielded N60 billion.
Emefiele was quoted to have said that although the lenders are making the contribution, the funds are sitting idly and unutilised at the CBN, thereby contradicting the primary objective for setting aside the fund in the first place.

He stated that they were only being invested in treasury bills by the banks, while SMEs continue to suffer over poor credit access.
Emefiele said lending to the SMEs remained a focus of the CBN, urging banks to put more efforts at ensuring more credit flow to the weak in the economy, who he described as ordinary people without opportunities to borrow from banks.

 

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