CBN Provides Finance for Aviation Sector

The Central Bank of Nigeria (CBN) is providing financial assistance to airlines to end the crisis rocking the aviation sector. The monetary authority has concluded arrangements to include airlines on the list of target beneficiaries for the N500 billion small and medium scale (SME) intervention fund.

The CBN had announced that the fund was to cover SME activities in manufacturing, agricultural value chain and educational institutions. It however added that the fund was to apply to any other activity as may be directed from time to time. The CBN has decided that the airlines can now partake from the fund so that those that are indebted to the banks can refinance their loans and amortize them over a period of 10 to 15 years.

The banks have recently battled a number of airlines over huge non-performing loans, with some if the banks going to arbitration or the law courts for the winding up of the airlines or any other processes that will permit the recovery of the loans. The decision by the CBN to bail out the airlines is based on the fact that most of them are heavily indebted to banks in particular and by extension the banking sector. It is also to assist prop up the demand side to facilitate continued economic growth. That we believe, will help put off the feared finance crisis in the aviation industry.

According to the guideline for the operations of the N500bn SME fund, as released by the CBN recently, the SMEs that can participate are enterprises with asset base (excluding land) of between N5million and N500 million and labour force of between 11 and 300.

Finally Aero can stop selling in-flight refreshment.....

(source; thisdayonline.com)