COVID-19: CBN, Bankers’ Committee Back N3.5 Trillion Economic Stimulus, Pledge N100Bn Support for Local Drug Producers … Urge Firms to Source Raw Materials Locally

Malik Yahya/

The Central Bank of Nigeria (CBN) and the Bankers’ Committee have committed to the implementation of an economic stimulus plan amounting to over N3.5 trillion earlier announced by the CBN to cushion the effect of the coronavirus pandemic on the economy.

They also announced plans to provide special funding for select local drugs manufacturing company to enable the country cope with the public health crisis foisted on it by the disease.

In a communique read by the CBN Governor, Godwin Emefiele, at the end of an extraordinary meeting held in Lagos, today, the committee said it took decisions to ameliorate the impact of the disruption in the global supply chain on the nation’s health industry.

The communique disclosed that the CBN has approved “additional N100 billion intervention in healthcare loans to pharmaceutical companies, healthcare practitioners intending to expand/build capacity; and NI trillion in loans to boost local manufacturing and production across critical sectors.”

It further noted, “Given that this crisis is first and foremost a public health crisis, we are paying particular attention to our health industry.

“As aforementioned, global supply chains have been disrupted including dominant drug supply channels from China and India. In fact, many countries have or are planning to ban export of drugs and medical supplies from their countries. Clearly, we have no choice but to produce these items locally.

“Thus the Committee has identified a few key local pharmaceutical companies who shall be granted Naira and FX funding facilities to support procurement of raw materials and equipment required to exponentially increase local drug production in Nigeria.

“These include but are not limited to Emzor, Fidson, GSK, May & Baker, Unique Pharma, Swiss Pharma, Neimeth, Sagar, Orange Drugs, Dana Pharma, etc.”

While also observing that the combination of the measures announced by CBN amounts to over N3.5 trillion in stimulus to the Nigerian economy to ameliorate the pains arising from the COVID-19 health and economic crisis, it advised Nigerians and companies to “begin prioritizing their import needs and focus more on sourcing raw materials and inputs locally”.

Read full communique below:

CENTRAL BANK OF NIGERIA
COMMUNIQUE OF THE BANKERS’ COMMITTEE MEETING OF 21 MARCH 2020.

Good afternoon Ladies and Gentlemen, you will recall that in the last two weeks, the Monetary and Fiscal Authorities in Nigeria have been holding a series of discussions and roundtables with critical stakeholders to consider several scenarios and optimal responses on the impact of COVID-19 on the Global and Nigerian Economy. Indeed, the CBN has had cause to address the press twice before and this press conference is the third in the series by the CBN.

Today’s meeting with the bankers committee, comprising mainly of CEOs of Nigerian banks, dealt with the impact of COVID-19 on the banking system in particular and the economy in general.

The Committee discussed the significant health and economic crisis caused by the novel Corona virus (COVID-19) which has resulted in escalating worldwide infections, deaths, disruptions in global supply chains, travel restrictions and turmoil in the international financial markets. It further noted the policy responses across governments and central banks around the world including the CBN.

It was resolved that the CBN and banking industry will collaborate at this critical moment — with one coherent strategy to provide confidence to the customers, counter parties, the public and most importantly, put Nigeria first.

The industry has learnt lessons from previous crisis including the 2008 global financial crisis and the oil price slump of 2016, which will be applicable and position the industry to better deal with this crisis. The industry resolved that profit will not be the primary motive at this time. Rather, preserving confidence, financial stability and support for the economy will be the overriding objectives.

Engagements will be held with correspondent banks, trade creditors, trading partners regarding existing LC and trade commitments. The industry is committed to resolving these commitments in a comprehensive and orderly way. There will be transparent and open communication with all counterparties.

In view of the significant disruption of the global supply chains, the bankers committee advises Nigerians and companies to begin prioritizing their import needs and focus more on sourcing raw materials and inputs locally.

The bankers committee noted the success of the CBN’s 43 items policy and encouraged it to strengthen it and other measures targeted at export promotion and/or import substitution to position Nigeria as a key global producer and build a self-sufficient economy.

The Committee further discussed the financial system’s implementation and operationalization of the policy measures earlier announced by the CBN including:

Additional moratorium of 1 year on CBN intervention facilities.

Interest rate reduction on intervention facilities from 9% to 5%.

Creation of N50 billion targeted credit facility for affected households & SMEs.

Granting Regulatory forbearance to banks to restructure terms of facilities in affected sectors.

Strengthening the LDR policy, which is encouraging significant extra lending from banks.

Improving FX supply to the CBN by directing all oil companies (international and domestic) and all related companies (oil service) to sell FX to CBN and no longer NNPC.

Activation of the NI .5 trillion InfraCo Project for building critical infrastructure.

Additional N 100b intervention in healthcare loans to pharmaceutical companies, healthcare practitioners intending to expand/build capacity; v/ NI trillion in loans to boost local manufacturing and production across critical sectors.

The combination of these measures
amounts to over N3.5 trillion in stimulus to the Nigerian economy to ameliorate the pains arising from the COVID-19 health and economic crisis.

Given that this crisis is first and foremost a public health crisis, we are paying particular attention to our health industry. As aforementioned, global supply chains have been disrupted including dominant drug supply channels from China and India. In fact, many countries have or are planning to ban export of drugs and medical supplies from their countries. Clearly, we have no choice but to produce these items locally.

Thus the Committee has identified a few key local pharmaceutical companies who shall be granted Naira and FX funding facilities to support procurement of raw materials and equipment required to exponentially increase local drug production in Nigeria. These include but are not limited to Emzor, Fidson, GSK, May & Baker, Unique Pharma, Swiss Pharma, Neimeth, Sagar, Orange Drugs, Dana Pharma, etc.

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