CBN Reveals N2.126 Trillion Unpaid from Intervention Programme

The Central Bank of Nigeria (CBN) has disclosed that N2.126 trillion remains unpaid from its intervention program, sourced from the Cash Reserve Ratio (CRR) of deposit money banks (DMBs). This amount is part of the N2.408 trillion total loan disbursed to subnational governments and businesses across Nigeria since the program’s inception in 2018. However, only N282.04 billion has been repaid, representing just 11.71% of the total loans disbursed.

According to the CBN Development Finance report, which outlines loans to various sectors of the economy in recent years, the Differentiated Cash Reserve Ration (DCRR) intervention was introduced in 2018. The program aimed to boost foreign exchange earnings, create job opportunities, diversify the revenue base, and provide sustainable inputs for the industrial sector of the economy. It benefitted around 499 recipients, including state governments and businesses such as Bua Refinery and Petrochemical Ltd. Interest rate payments for the program amounted to N51.47 billion, with N67.3 billion overdue.

Achievements of the program include the productive use of banks’ CRR to stimulate economic development, the creation of over 6 million direct and indirect jobs, import substitution, and an increase in the Purchasing Managers’ Index (PMI) for the manufacturing sector. However, challenges such as forex scarcity, the commercialization of financed infrastructural projects, and poor optimization of export potentials have hindered the program’s success.

The report recommends continuing the program as it offers an alternative credit funding source. It also suggests bridging the interest rate gap to prevent refinancing of non-performing facilities from banks’ books.

In 2018, the CBN released guidelines for disbursing funds to banks for lending from their CRR, specifying that projects funded must focus on backward integration and import substitution. The DCRR funding aims to provide affordable financing to DMBs interested in extending credit to customers for new and expansion projects in the real sector, particularly in agriculture and manufacturing.

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