The Central Bank of Nigeria (CBN) has announced the reversal of the interest rate on all its intervention loans to 9 per cent from 5 per cent.
In the wake of the COVID-19 pandemic in 2020, the apex bank slashed the interest rate on its facilities offered to manufacturers to 5 per cent to help cushion the effect of the crisis.
After about two years of leaving the rate low to encourage borrowing for production, which will eventually stimulate the economy, the central bank has reverted to the old rate.
This is also coming after the Monetary Policy Committee (MPC) of the apex bank has raised the monetary policy rate (MPR) to 14.00 per cent from the 11.50 per cent it was when the pandemic struck.
In a circular dated August 17, 2022, and signed by Chibuzo Efobi, the Director of Financial Policy and Regulation Department at the CBN stated that all loans granted from July 20, 2022, would be at 9 per cent per annum.
“Further to our circular dated March 15, 2022, (Ref: FPR/DIR/PUB/CIR/001/040) extending the period of interest rate reduction on all intervention facilities from 9 per cent to 5 per cent per annum (as part of measures to mitigate the negative impact of COVID-19 pandemic on the Nigerian economy), the CBN hereby reverts the interest rate on all its intervention facilities to 9 per cent per annum.
“The revised rate shall be implemented as follows:
All intervention facilities granted effective July 20, 2022, shall be at 9 per cent per annum; all existing intervention facilities granted prior to July 20, 2022, shall be at 9 per cent per annum effective September 1, 2022.
“Further enquiries on the provisions of this circular may be referred to the Director, Development Finance Department,” the notice said.