As the world grapples with the fallout of Coronavirus and how to best manage the public health pandemic, eyes now turn to Central Banks and how they can help in containing the economic effects of the virus.
Global central banks such as the US Federal Reserve, the European Central Bank, Chinese Central Bank among others have prioritised ensuring stability of the financial system to withstand the shocks in their respective countries’ economies.
In Africa, the biggest economy Nigeria through her Central Bank has committed $2.7 billion in support to key sectors such as manufacturing and healthcare to ease the pressure on the sectors. Despite reducing interest rates on central bank loans from 9 per cent to 5 per cent annually, Nigeria’s regulator also asked banks to give their customers more time to repay their loans.
Also, South Africa’s main bank cut lending rates to 5.25 per cent, the biggest rate cut in 10 years in an effort to shield the country’s economy from recession.
In Kenya, the country’s Central Bank has directed commercial banks to give a year long relief to all current loans which were due for payment. The governor says about 28 per cent of all loans are personal loans and relief should be given on individual circumstances.
Generally, central banks are encouraging banks to lend to small and medium size businesses so as to protect them from the excesses of this health pandemic.