The Central Bank of Nigeria (CBN) has set N2 billion as the maximum borrowing limit for any healthcare provider seeking to access the N100 billion lifeline it approved for the health sector.
It announced the limit in an operational guideline released for the fund at the weekend.
The fund was established to cushion the impact of Coronavirus (COVID-19) pandemic on the economy and to support healthcare providers.
It was also meant to ensure that the sector meets the expected rise in the demand for healthcare products and services.
The guideline, signed by CBN Director, Financial Policy Regulation Department, Kevin Amugo, said working capital loans shall be considered based on 20 per cent of the average of three years of the proposed borrower’s turnover, subject to a maximum of N500 million per obligor.
Also, where the loan is a term loan, a maximum limit of N2 billion per obligor and five per cent interest rate up till February 2021 shall apply.
Interest rate for the facility shall revert to nine per cent as from March 1, 2021.
The apex bank also set the exit date for all the facility under the scheme at December 31, 2030 and stipulated a joint monitoring of financed activities by the CBN and participating financial institutions.
“Term loan shall have a maximum tenor of not more than 10 years with a maximum of one year moratorium on repayment. In terms of construction, the tenor shall be determined by the completion date,” the guideline stated.
According to the guideline, the eligible participants under the scheme shall include healthcare product manufacturers- pharmaceutical drug and medical equipment; healthcare service providers/medical facilities- hospitals/clinics, diagnostic centers/ laboratories, fitness and wellness centers, rehabilitation centers, dialysis centers, blood banks, among others.
Also to benefit are pharmaceutical/medical products and logistic services, and other human healthcare service providers as maybe determined by the CBN from time to time.
The CBN guideline said: “The modalities require that a corporate entity submits its application to a participating financial institution of its choice with a bankable business plan.
“The participating financial institution shall appraise and conduct due diligence on the application. Upon approval by the participating financial institution’s Credit Committee, the application shall be submitted to the CBN with relevant documents attached. The CBN will process and disburse funds to the participating financial institution for onward release to the project.”
It stipulated that indigenous pharmaceutical companies and healthcare practitioners that want to expand or build their capacities would benefit from the facility.
According to the guidelines, the scheme will be funded from the real sector support facility, with Deposit Money Banks, Development Finance Institutions named as participating financial institutions.
According to it (guideline), the fund will reduce health tourism to conserve foreign exchange, provide long-term, low cost finance for healthcare infrastructure development, and improve access to affordable credit by indigenous pharmaceutical companies.
It was also meant to support the provision of shared services through one-stop healthcare solution to enhance competition and reduce the cost of healthcare delivery in the country.
The CBN announced the N100 billion package for the healthcare industry to strengthen the sector’s capacity to meet potential increase in the demand for healthcare and services.
The CBN said the scheme was also expected to increase private and public investment in the healthcare sector, facilitates improvement in healthcare delivery and reduce medical tourism to enhance foreign exchange conservation.
The bank further explained that the objective of the scheme was to provide long-term low cost finance for healthcare development that would lead to the evolvement of world-class healthcare facilities in the country.
According to the bank, the scheme will improve access to affordable credit by indigenous pharmaceutical companies to expand their operations and comply with the World Health Organisation’s (WHO) good manufacturing practices.
The CBN noted that the eligible participants under the scheme were healthcare products manufacturers and pharmaceutical equipment.
It added that others are healthcare service providers, medical facilities, pharmaceutical and medical products distribution and logistics services, among others.