Monday, November 08, 2021 / 10:24AM / by CBN / Header Image Credit: iStock                                                                                                                                                                                    

In an effort to stimulate the flow of credit to thereal sector of the economy in order to reverse the nation's over-reliance onimport, the Central Bank of Nigeria hereby issues the Guidelines for theimplementation of the 100 for 100 Policy for Production and Productivity (100for 100 PPP) for eligible private companies with potential to immediatelytransform and catalyse the productive base of the economy.

Enquiries on the Guidelines may be referred to theDirector, Development Finance Department, Central Bank of Nigeria, Abuja,

Guidelines for the Implementation of the 100 for 100 PPP (Policy onProduction and Productivity)

1. Introduction

Infurtherance of its core mandates of delivering price and financial systemstability, and promoting sustainable economic development, the 100 for 100Policy on Production and Productivity (PPP) is introduced by the Central Bankof Nigeria (CBN) to stimulate investments in Nigeria's manufacturing sectorwith the core objective of boosting production and productivity, necessary totransform and catalyze the productive base of the economy. The overarching goalof the initiative is to reverse the nation's overreliance on imports.

Theinitiative, 100 for 100 PPP, is a financial instrument designed to create theflow of finance and investments to enterprises with potential to catalyzesustainable economic growth trajectory, accelerate structural transformation,promote diversification, and improve productivity.

Quarterly,starting from 1 st November 2021, the initiative shall select 100 privatesector companies with projects that have potential to significantly increasedomestic production and productivity, reduce imports, increase non-oil exports,and overall improvements in the foreign exchange generating capacity of theNigerian economy. The initiative, which shall be bank-led, will be rolled overevery 100 days (that is, quarterly) with new set of companies selected forfinancing under the initiative. The initiative shall be implemented incollaboration with relevant stakeholders with focus on micro and macroeconomicimpacts, in terms of contribution to GDP and exports, sustainable jobs created,local content development, production output, and capacity utilisation andintegration into the global value chain.

These Guidelines outlines the operational modalities for the instrument.

2. Objectives of the initiative

Thebroad objective of the initiative is to reverse the nation's over-reliance onimports, by creating an ecosystem that targets and supports the right projectswith potential to transform and catalyse the productive base of the economy.The specific objectives of the initiative include:

• catalyseimport substitution of targeted commodities;
• increase localproduction and productivity;
• increasenon-oil exports; and iv. improve foreign exchange earning capacity of theeconomy.

3. Key Performance Indicators (KPIs)

Acomprehensive, regular monitoring of specific benchmarks and key performanceindicators (KPIs) under the initiative shall be undertaken regularly. The KPIs(specific and relevant) shall include:

1. Percentageincrease in production output of financed companies;
2. Percentageincrease in capacity utilisation;
3. Percentageincrease in export volume;
4. Percentageincrease in export value;
5. Percentagedecrease in import volume of industrial raw materials;
6. Percentagedecrease in import value of industrial raw materials;
7. Increase innumber of jobs created.

4. Activities Covered

Focalactivities covered under the initiative shall be existing businesses andprojects (brownfield) with potential to immediately transform and catalyse theproductive base of the economy. New projects (greenfield) with equal potentialmay be considered under the initiative, subject to CBN Management's approval. 

Theactivities can be in any of the following:

1. Manufacturing;
2. Agricultureand agro-processing;
3. Extractiveindustries;
4. Petro-chemicalsand renewable energy;
5. Healthcare andpharmaceuticals
6. Logisticsservices and trade-related infrastructure e.g. cold chain solution, qualityassurance infrastructure; and
7. Any otheractivities as may be prescribed by the CBN.

5. Funding

The 100for 100 Policy on Production and Productivity (PPP) initiative shall be fundedfrom the CBN's Real Sector Support Facility - Differentiated Cash ReserveRequirement (RSSF-DCRR) window or any other funding window as may be determinedby the CBN.

6. Financial Instrument Features

Theinitiative shall be implemented in line with the provisions of the guidelinesfor the implementation of the underlying intervention (RSSFDCRR), whichinclude:

6.1    Loan Type

• Long-term loan for acquisition of plant and machinery
• Working capital

     6.2     Loan Limit

Loanamount shall be a maximum of N5 billion per obligor. Any amount above N5billion shall require the special approval of CBN's Management.

    6.3       Interest Rate

Interestrate under the intervention shall be at not more than 5.0% p.a. (all inclusive)up to 28th February 2022, thereafter, interest on the facility shall revert to9% p.a. (all inclusive) effective from 1st March 2022.

6.4    Loan Tenor and Moratorium

 Term loansshall have a maximum tenor of ten (10) years depending on the complexity of theproject, not exceeding 31st December 2031. Each project tenor shall bedetermined in relation to its cash flow and life span of the underlyingcollateral.

1. Moratorium: Termloans shall have two (2) years moratorium.
2. Workingcapital facility shall have a tenor of one (1) year with provision for rollover for a maximum of three (3) years.
3. Theparticipating financial institution (PFI) shall bear the credit risk.
4. Refinancing ofexisting facilities allowed under the initiative, subject to Management'sapproval.

     6.5          CollateralRequirements

Thecollateral acceptable under the intervention facility shall be as may beacceptable by the PFI under the RSSF-DCRR.

    6.6            Repayment

Monthlyinterests on the facility shall be amortised and transferred quarterly withprincipal repayments to the CBN.

   6.7             ParticipatingFinancial Institutions (PFIs)

OnlyCRR contributing Deposit Money Banks (DMBs) shall be eligible to participateunder the initiative.

     7. Modalities

i. Interested private sector companies shall submit their applications to theirPFIs with requisite documentation which shall include, amongst others:

• Certified true copies of company registrationdocuments evidencing the incorporation of the Company with the CorporateAffairs Commission (CAC);
• Three (3) years audited financials including thelatest management account of company;
• Evidence creditworthiness of the company, itspromoters and directors;
• At least two (2) credit reports of the company andthe directors;
• Business plan of the underlying project for whichthe facility is to be applied;
• Detailed status report on project's capacityutilisation, production output, productivity/efficiency level, employmentlevel, export capacity and value creation; and
• Projected post-financing economic benefit ofproject – increase in capacity utilisation, production output, productivity/efficiencylevel, employment level, export capacity and value creation after financing.

ii.  Applicants shall notify CBN of submitted applications via a dedicated onlineportal (https://100for100ppp.ng) fortracking and monitoring status of applications;

iii.  The lending bank shall receive applications and carry out due diligence onapplications based on business and credit considerations;

iv.  Upon approval by the appropriate PFI's Credit Committee, lending bank shallforward applications of their eligible private sector companies to the CBN;

v.  TheCBN shall screen and finance eligible private sector companies in 100 days, androlling over every 100 days

vi.  Central Bank of Nigeria shall conduct internal review of the applicationsreceived to ensure compliance with the stipulated requirements forparticipation under the initiative

vii.  The CBN shall release the approved sum to the PFI for onward disbursement tothe selected private sector companies;

viii.  The successful beneficiaries would be published in National Dailies forNigerians to verify and confirm with details of facility granted, operatingsector, manufacturing activities financed, and PFI.

8. Selection Criteria

Theselection criteria shall comprise the following key areas, parameters (withweights assigned) and indicators:

      9. Responsibilities of Stakeholders

For theeffective implementation of the initiative, the responsibilities of thestakeholders shall include:

        9.1 Central Bank of Nigeria

The CentralBank of Nigeria shall:

• TheCBN shall screen and finance eligible private sector companies in 100 days, androlling over every 100 days;
• conduct internal review of the applications received from the PFIs to ensurecompliance with the stipulated requirements for participation under theinitiative;
• rank and select for financing, 100 private sector companies per quarter withpotential to immediately transform and catalyse the productive base of theeconomy;
• release the approved sum to the PFI for onward disbursement to the selectedprivate sector companies within two (2) week of receipt of applications fromPFI;
• publish in at least three (3) national dailies the list of selected privatesector companies with details of facility granted, operating sector,manufacturing activities financed, and PFI;
• carry out periodic verification and monitoring of projects financed with thelending PFI;
• maintain and provide periodic reports to the CBN Management on the performanceof the intervention;
• ensure compliance with the provisions of the Guidelines; and
• review the Guidelines as may be necessary from time to time.

       9.2 Participating Financial Institution (PFI)

The PFIshall:

• receiveapplications submitted for selection and financing under the initiative fromprivate sector companies;
• carry out duediligence on application and ensure that all conditions precedent are met;
•  ensurecompliance with PFI's credit policy;
• forwardapproved applications to CBN for verification and final approval within two (2)weeks of receipt of applications;
• disburse theapproved sum to the enterprise, within five (5) working days, in accordancewith the approved disbursement schedule;
• failure todisburse the approved funds in accordance with item (iv) above shall attract apenalty of MPR+2
• registermovable collaterals with the National Collateral Registry (NCR);
• obtain at leasttwo (2) credit reports on the company and its directors;
• monitorfinanced projects and render periodic returns as may be specified by the CBNfrom time to time;
• ensurerepayments of facilities by obligors; and
• comply withthe Guidelines of the Facility.

      9.3 Obligors

TheObligor shall:

• submitapplication to its PFIs, within the advertised deadline for submission ofapplications with complete documentation, as may be stipulated forparticipation under the initiative
• notify CBN ofsubmitted applications via a dedicated online portal (https://100for100ppp.ng) for tracking andmonitoring of application status;
• ensure prudentutilisation of facility for the purpose for which it was granted;
• insureprojects financed under the initiative;
• keepup-to-date records of the enterprise's activities under the intervention;
• undertake toallow unrestricted access to the project and records by the CBN and PFI;
• epay the facility in accordance with the approved repayment schedule; andviii. comply with the provisions of the Guidelines.

    10. Verification and Monitoring

Projectsfinanced under the initiative shall be subject to verification and monitoringduring the loan period by the CBN and PFI.

     11. Discontinuation of Credit Facility

In theevent that the initiative is discontinued, the PFI shall return the undisbursedfund to the CBN, within 5 (five) days of the discontinuation.

     12. Dispute Resolution

Alldisputes shall be resolved in line with the Consumer Protection Regulations ofthe Central Bank of Nigeria.

     13. Infractions

Theinfractions and sanctions, stipulated in the RSSF guidelines, shall beapplicable under this intervention facility.

     14. Exit Date

Theinitiative shall be operated in the first instance for a period not exceeding31st December 2031 depending on the complexity of the project.

     15. Management of the initiative

Theinitiative shall be managed by the Development Finance Department of theCentral Bank of Nigeria.

1. TheCBN reserves the right to reject an application from any applicants that doesnot meet the requirements of the Guidelines.
2. TheCBN may amend this Guidelines from time to time and may waive any part of thisGuidelines upon the approval of the Governor.

     16. Enquiries and Returns

Allenquiries and returns should be addressed to:

TheDirector,

DevelopmentFinance Department,

CentralBank of Nigeria,

CorporateHeadquarters

CentralBusiness District, Abuja.

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