In November this year, Nigeria’s apex bank released the guidelines for its ‘100 for 100 Policy on Production and Productivity’ (PPP) loan, which it conceived to boost “production and productivity, necessary to transform and catalyse the productive base of the economy [and] reverse the nation’s over-reliance on imports.”

This is not the first time Africa’s most populous nation is launching initiatives to tackle excessive importation, but this time, it is extending its reach to industries other than agriculture including the manufacturing and extractive sectors; petrochemical and renewable as well as health and pharmaceutical industries, logistics services and trade-related infrastructure, and, “any other activities as may be prescribed by the CBN.”

Close up image of a hand filling a loan form — CBN will grant 100 businesses in the private sector loans up to N5bn every quarter. Image courtesy of RODNAE Productions from Pexels

What the 100 for 100 PPP loan looks like

The 100 for 100 PPP loan is a N5bn-per-obligor instrument that the CBN plans to disburse to 100 private-sector companies every 100 days. It is divided into two types: a long-term loan for the acquisition of plant and machinery, and a working capital loan. Under both types, approved businesses will be able to get up to N5bn. Any amount higher than this will have to get special approval from CBN’s management.

With regards to interest rates, this is calculated at not more than 5% p.a. till February 28 2022. From March 1, 2022, the rates go up to 9% p.a.

And at this point, the similarities stop. The long-term loan comes with a maximum tenor of 10 years depending on the complexity of the project, and will not exceed December 31 2031. It also allows a grace period before repayment (moratorium) of two years. The working capital facility, on the other hand, only offers a 1-year moratorium while tenor will not exceed three years.

The 100 for 100 PPP loan will be available to a wide range businesses — The loan is available to businesses in the private sector, including pharmaceutical companies. Image courtesy of Shutterstock

How to apply

Interested businesses will have to go through the Participating Financial Institutions (PFIs) to submit the required documentation for their application, after which they would notify CBN through a dedicated online portal. The loans will be disbursed through the PFIs, and repayments will go through them too.

In the last year, consumers have had to look inwards for products and services that meet their needs in the face of travel restrictions and the global supply chain crisis caused by COVID-19. Inevitably, some Nigerian businesses would have experienced increased demand and established new growth opportunities at home and beyond. For those who would meet the criteria, the CBN 100 for 100 PPP loan is worth looking into.