BEVERLY HILLS, July 22, (THEWILL) – The Central Bank of Nigeria (CBN) has announced a N50 billion special mechanism funds to revive the ailing textiles industry.
The funds to be administered by the Bank of industry (BoI) at 4.5 per cent interest rate will use any of the CBN-approved non-interest financing instruments for refinancing of projects, long- term financing for acquisition of plant and machinery and working capital for the beneficiaries.
A statement containing the guidelines for funds, tagged “Central Bank of Nigeria Non-Interest Guidelines for Intervention in the Textile Sector”, signed by CBN Director, Financial Policy and Regulation Department, Kelvin Amugo, has been released.
The apex bank said the funds would be used to resuscitate the ailing textile sector, restructure facilities and provide further facilities for textile firms with genuine need for intervention.
According to the apex bank, the seed fund, which is a one-off intervention, will terminate by December 31, 2025 with the maximum financial amount pegged at N2 billion for a single obligor for new facilities and N1 billion for refinancing.
The regulator said the plan to turnaround the textile sector was perfected at the August 7 meeting between the CBN Governor, Godwin Emefiele and textile mill owners.
The resolutions reached at the meeting were that the textile mills articulate the status of their BoI Cotton Textile and Garment (CTG) Loans, stating their outstanding balances, tenure, interest rate, interest payment and the assistance being sought from CBN.
The CBN listed activities to be covered under the Intervention as operations in the CTG value chain include cotton ginning (lint production), spinning (yarn production), textile mills, integrated garment factories (for military, para-military and schools and other uniformed institutions).
The eligibility criteria for participation in the scheme indicated that any textile company with an existing facility in the books of BoI under the CTG scheme, any textile company with existing facilities in Deposit Money Banks/Non Interest Financial Institutions (NIFIs), textile companies that are not participating under the Small and Medium Enterprises/Restructuring/Refinancing Fund (RRF) are qualifies while projects financed before June 2009 (inception of the BoI CTG Loan) shall not be eligible to participate.
It said emphasis would be on facilities that are indicating weakness arising from tenor, structure as well as facing cash flow difficulties.
Further modalities for the facility showed that the fund will be administered at an all-in rate of return of 4.5 per cent per year payable quarterly.