By Omoh Gabriel, Business Editor
LAGOSâ€”THE Central Bank, yesterday, saidit had expanded beneficiaries of the N500 billion power and industry revival fund to include the aviation sector of the economy and that airline operators were now free to access the fund.
With the expansion, airlines currently indebted toÂ banks can refinance their loans through the window provided by the CBN and amortise them over a period between 10 and 15 years.
The apex bank said the inclusion of the aviation sector was based on the fact that most of the airlines in the country were heavily indebted to banks noting that this was a risk to the concerned banks and the banking sector in general.
The bank said its decision was also to raise the demand side to facilitate continued economic growth, adding that this would put off the feared financial crisis in the aviation industry.
It will be recalled that Vanguard reported, last week, that CBN released the guidelines to the N500 billion power and industry revival fund it set up.
The guidelines stipulated that industries operating in the country which sought to refinance or restructure theirÂ operations could access a maximum of N1 billion from the apex bank sponsored N500 billion industry revival funds. The fund is no longer for industries alone as the CBN has now included the aviation sector.
Eligibility for access
According to the CBN guidelines to the revival fund, â€œthe 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 seven per cent per annum payable on quarterly basis.
Specifically, the Managing Agent (BOI) shall be entitled to a one per cent management fee and the banks, a six per cent spread.â€
To be eligible to access the fund the CBN said: â€œAny entity falling within the definition of an SME and/or manufacturer; an entity wholly-owned and managed Nigerian private limited company registered under the Companies and Allied Matters Act of 1990. A legal business operated as a sole proprietorship; be a member of the relevant Organised Private Sector Associations such as MAN, NASME, NACCIMA, NASSI.â€
The CBN guideline specified that â€œany 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.
The bank listed activities to be covered under the Fund as manufacturing, stating that an entity will be adjudged to be a â€œManufacturerâ€ if it was involved in the production and processing of tangible goods, fabricates, deploys plants, machinery or equipment to deliver goods or provide infrastructure to facilitate economic activity in the real sector; adding that such entity must not be involved in the financial services industry.
It added that such manufacturers include Small and Medium Scale Enterprise, SMEs, defined as entities with asset base (excluding land) of between N5 million and N500 million and with labour force of between 11 and 300.
The apex bank said that in its bid to unlock the credit market, it had approved the investment of N500 billion Debenture Stock to be issued by the Bank of Industry, BOI, adding that N300 billion would be applied to power projects and N200 billion to the refinancing/restructuring of banksâ€™ existing loan portfolios to Nigerian SME/Manufacturing sector.
CBN said objectives of the Fund included fast-tracking the development of the manufacturing sector of the economy by improving access to credit to manufacturers; improving the financial position of banks in the country, increasing output, generating employment, and diversifying the revenue base. Others are to increase foreign exchange earnings and provide input for the industrial sector on a sustainable basis.
The guidelines stated that the Bank of Industry, BOI, would be the Managing Agent and be responsible for the day to day administration of the Fund, adding that trading activities would not be accommodated under the fund.