By Job Osazuwa
No doubt, the COVID-19 pandemic dealt the world a devastating blow and Nigeria was not exempted. The global economy suffered grave setbacks. Many people lost their jobs as a result of companies shutting down. Social life was disrupted and people’s ways of life were generally altered.
Also gravely affected was the health care sector. The various health facilities and institutions were overwhelmed, gasping for breath.
To mitigate the effects of the pandemic on the economy, particularly on the health sector, the Central Bank of Nigeria (CBN) rolled out a N100 billion intervention fund. The low-interest loan was geared towards improving local manufacturing and increasing capacity to combat the-19 pandemic and other related health challenges.
The CBN had in April 2020 taken measures to extend credit facilities of up to N100 billion to support the sector. The aim of the intervention, as gathered, was to stimulate economic activities locally within the health care sector, while making products and services available to Nigerians, thereby building, diversifying and expanding the capacity of the sector.
It was learnt from the CBN that N93 billion of the fund has already been disbursed to beneficiaries and the positive impact has also been felt in the private sector. The intervention was with a view to strengthening the sector’s capacity to meet potential increase in demand for health care products and services.
Specifically, the scheme was to provide credit to indigenous pharmaceutical companies and other health care value chain players to build or expand capacity. The scheme is expected to increase private and public investment in the health care sector, facilitate improvements in health care delivery and reduce medical tourism to enhance foreign exchange conservation.
So far, stakeholders have commended the progress made through the fund. They said most local pharmaceutical industries, with the help of the fund, have been able to boost their production capacity to manufacture facemasks, personal protective equipment, hand sanitisers, gloves, anti-viral drugs, ventilators, medical supplies and vaccines.
Chairman of the Pharmaceutical Manufacturers’ Group of Manufacturers’ Association of Nigeria (PMG-MAN), Dr. Fidelis Ayebae, expressed gladness that every company that met the loan requirements got it. He added that the way the CBN implemented the initiative was commendable.
He said: “Members that are yet to access it are working with the commercial banks with whom they have a relationship to close up documentation gaps before moving on to CBN. Some of the impact can already be seen in the financial performance of the early recipients of the loans.”
On his part, president of the Nigerian Association of Resident Doctors (NARD), Dr. Uyilawa Okhuaihesuyi, said: “The Federal Government, through the CBN, had offered pharmaceutical companies and medical practitioners low-interest rate loans up to N100 billion from 2020 as intervention to improve local manufacturing and increase their capacities. It is commendable.”
Consultant pharmacist and medical director, Merit Healthcare, Dr. Lolu Ojo, said: “I know some big companies that got the money. Many companies have offers but funds were released late. Although there were challenges, the intervention fund has made huge impact.”
In the same vein, pharmacists, under the aegis of the Pharmaceutical Society of Nigeria (PSN), have confirmed that more than 90 per cent of the N100 billion COVID-19 intervention fund for the healthcare/pharmaceutical industry has been accessed by its members.
However, raising some posers, the president of PSN and convener of the New Nigeria Group (NNG), Mazi Sam Ohuabunwa, said: “I have said it repeatedly, the CBN and COVID-19 intervention funds, laudable ideas as it is, is yet to achieve its objectives. The impact of difficulty in forex access is that it portends grave danger and may undermine the noble objectives.
“First, the longer it takes to get the machines and equipment in, the longer it will be for Nigeria to begin to see enhanced local production.
“Second, the longer it takes, the more difficult it will be for the benefitting companies to begin production and generate cash flow to meet the interest and repayment obligation, as the moratorium is fast approaching.
“Third is that, with forex at rates higher than the planned or forecast rates in the business plan, the money received in naira may no longer be sufficient to meet the stated needs.
“Another challenge is that the longer the naira is left in the banks awaiting piecemeal allocation of forex, the faster the value depreciates by growing inflation and the fewer the number of machinery and equipment or even raw materials that can be bought.”
Acting head, corporate affairs, CBN, Mr. Osita Nwanisobi, said the Health Sector Intervention Facility (HSIF) was established to address health infrastructure decay in the country.
According to him, “Over N85 billion has been disbursed to date, covering 82 projects. N22.5 billion was disbursed to states for revamping of primary health care centres across the country.
“On monitoring, we are evaluating the utilisation and thus far there has not been any diversion.
“We need to understand that this is health intervention and the health sector is regulated. What you may refer to absence of evidence of investment in the sector is because the beneficiaries are doing the right thing by going through the regulatory hurdles for each stage of utilisation. Soon, the impact will be obvious. Besides, the CBN also carry out impact assessment of the facility.”
He said that the HSIF has been used to finance the acquisition and installation of 16 magnetic resonance imaging (MRI) machines across the country and acquisition and installation of 22 medical scanning machines by hospital across the country.
Nwanisobi said the Real Sector Support Facility-Differentiated Cash Reserves Requirement (RSSF-DCRR) of the CBN would fund the scheme, and disbursements are made by participating financial institutions (PFIs). The eligible financial institutions are deposit money banks and development finance institutions.
He said that the loan amount limit to be provided is based on whether the loan is to fund working capital or is a term loan.
“If the loan is for working capital purposes, the loan limit is based on whether the eligible participant has been in operation for up to three years at the time of applying for the loan.
“Where the loan is for working capital and the eligible participant has been in operation for at least three years, the loan limit shall be calculated at 20 per cent of the company’s three year average of its turnover, up to N500 million.
“Where the loan is for working capital and the eligible participant has not been in operation for at least three years, the loan limit shall be calculated at 20 per cent of the company’s previous year’s turnover, up to N500 million,” Nwanisobi said.
He explained further that, where it is a term loan, the limit shall be N2 billion for the eligible participant and interest rate is no more than 5 per cent per annum all-inclusive for loans taken until February 28, 2021, and 9 per cent per annum for loans taken from March 1, 2021.
He noted that the loan tenure depends on whether the loan was taken for funding working capital or if it is a term loan. He clarified that for working capital, the tenor shall be for a period of up to one year, with an option for roll-over for no more than three years.
He said that for a term loan, the tenor should be up to 10 years with a maximum of one-year moratorium on repayment. Except for term loans for construction projects, the tenor of which shall be determined by the completion date.
Nwanisobi said repayment shall be broken down into interest and principal repayments, which shall be paid in instalments as, provided by the PFIs. He stated that the PFIs shall remit the repayment to the scheme every quarter.
Said he: “Eligible participants shall submit an application to a PFI of its choice with supporting documentation including a business plan. PFI shall conduct due diligence on the application. Upon approval by the PFI, the application shall be forwarded to the CBN for its approval.
“When CBN approves the application, the funds will be disbursed to the PFI for release to the eligible participant. Delays and/or non-release of funds to eligible participants within the timeline stipulated in the offer letter shall attract a penalty at the PFI’s maximum lending rate. The intervention shall end by December 31, 2030.”