CBN To Disburse N130bn To Manufacturers

The Federal Government has approved for the Central Bank of Nigeria (CBN) to disburse N130 billion out of the N500 billion fund pooled together by banks to revamp the ailing manufacturing sector. The CBN and Bank of Industry (BOI) signed the agreement yesterday in Abuja.

The Minister of State for Information and Communications, Labaran Maku disclose while briefing State House correspondents, at the end of the weekly Federal Executive Council (FEC) Meeting. He said that the funds would be disbursed to the manufacturing sector in the next two months.
Maku, in company of the Minister of Information and Communications, Dora Akunyili, said the injection of the money would help the sector witness steady growth.

The Minister said, “the CBN has stated that the guidelines for the implementation of the N500 billion for refinancing and restructuring manufacturer’s exposures to the deposited money have been prepared, out of which approval to disburse N130 billion has been granted”.

CBN Governor, Mallam Sanusi Lamido Sanusi, had earlier told newsmen that about 317 customers out of 377 applicants were eligible for N130 billion but that the benefiting banks will support with 50 per cent of the loan thus making the total fund for the real sector to be N200 billion.
“For 300 customers, 130 billion has gone out. And we are also reviewing other applications. This means another 65 billion credit because every bank that is benefiting from this had signed an agreement to increase its lending to the real sector by at least 50 per cent of the amount we are giving them. That makes it N200 billion going to the real sector,” he said.

The loans, which will be repaid in 15 years will have an interest rate of seven per cent adding that Bank of Industry is the manager of the funds. According to him, two years from now the gesture will be able to generate a number of jobs. Managing Director of BOI, Ms Evelyn Oputu, explained that out of the 377 applications, only 317 were eligible for the fund while assuring the CBN of BOI's commitment to recover the funds as and when due.

The Minister of State said that the CBN briefed Council on the performance of the economy in the second quarter of 2010, saying that the Council was informed that there had been steady growth in gross domestic products (GDP) moderation in inflation. Interbank rates and other money market rates including lending also moderated.
The foreign exchange market Maku stated “was substantially stable, while the recovery in the capital market continued. However the growth in monetary and private sector credit aggregates remained sluggish”.
He also said: “The CBN informed the council that the implementation of the banking sector reforms have continued to engender confidence in the system and credit by the rescued banks to grow, while most of them have returned to profitability”.

The CBN governor who pegged GDP at 7.68 per cent Maku said, “also briefed the council on the bankers committee initiatives to support government economic programmes such as; interactions with state governments in order to generate a pipeline of projects that the financial system will fund, support towards the effective use of infrastructure bonds and providing economic advocacy for power and agriculture”.
Speaking on the modality for operationalising the Asset Management Company of Nigeria (AMCON), which was signed into law by President Goodluck Jonathan, on July 19 2010, Maku said the CBN has finalized the strategises noting that “without the establishment of AMCON, the rescued banks would have been eventually liquidated if there are no viable buyers”.

He concluded that the Nigerian economy remains resilient and that the near-to-medium term outlook is positive and that monetary policy will continue to be supportive of government objectives.
He said Sanusi ended the brifing by saying that “stronger growth that will create employment can be achieved with the provision of critical infrastructure and the concurrent implementation of on-going reforms in all the sectors of the economy”. The report showed the economy on sustainable growth, especially the non-oil sectors led by agriculture, retail trade, services and construction.

Maku said the need for deeper reforms in the energy, petroleum and power sectors was emphasized to realign economic policies to the financial reforms to encourage credit flow into the real and strategic sectors of the economy.
Maku stated further that “government emphasized the need for proper coordination between the CBN and the Economic Management Team (EMT) to ensure reforms are properly channeled towards the real sectors of the economy”.

While expressing confidence in the banking reforms by Sanusi and his team, Maku said “government is confident that with all that is going on in terms of reforms and policy focus, the nation’s economy will witness sustainable growth in the years ahead”.

Meanwhile council approved the award of contract for the development of 1500 hectares of irrigation scheme of the Tada Shonga Irrigation project, in the sum of N3.3 billion with a completion period of 36 months. Akunyili said Council also approved January 1, 2012 to be the effective date for convergence of accounting standards in Nigeria with International Financial Reporting Standards (IFRS).

Accounting standards are benchmarks for the preparation of financial statements by private and public institutions globally. Akunyili said “the increasing sophistication of the Nigerian industrial and commercial environment compels the imperative of appreciating the risk about the flow of economic capital , both foreign and domestic.