Sequel to its development finance initiative, the Central Bank of Nigeria (CBN) has agreed to leave interest rates at five per cent per annum for critical sectors and manufacturing industries until March 2023.
The decision followed the resolution of the Monetary Policy Committee to increase benchmark interest rate to 13 per cent from 11.5 per cent. Rate increases of this nature often lead to increases in lending rates across the various sectors of the economy.
The CBN said: “The MPC is of the view that rates on the development finance initiatives of the Bank should remain at five percent till March 2023.”
The five per cent per annum interest rate is a form of subsidy for industry players who originally ought to pay an interest rate of nine per cent. But such rates may rise as high as 20 per cent per annum at commercial banks.
The decision to leave interest rates for intervention funds at 5 per cent, according to the CBN, was a measure to stimulate economic growth in critical sectors of the economy.
According to the apex bank, it had continued to fund activities across several sectors of the economy as part of its development finance activities. The funding came in the form of loans from the CBN through commercial and developmental banks.