The Central Bank of Nigeria (CBN) has unveiled guidelines for a Non-Interest Financial Institutions under its Agri-Business, Small and Medium Enterprise Investment Scheme (AGSMEIS) and Micro, Small and Medium Enterprises Development Fund (MSMEDF).
This was disclosed by the apex bank via its website on Tuesday. The guidelines also included the Accelerated Agricultural Development Scheme (AADS) and seven other intervention schemes in its bouquet.
How the AGSMEIS works
* The CBN would create a Fund to be known as ‘AGSMEIS Non-Interest Fund’ that will be domiciled in a dedicated account with the apex bank.
* Each non-interest deposit Bank (full-fledged or window) was to set aside 5% of its Profit After Tax (PAT) annually as contribution to the Fund.
* Each non-interest Deposit Bank was also to transfer its contribution to the CBN not later than 10 working days after the Annual General Meeting (AGM) of the participating bank.
* Eligible activities under the Scheme are businesses across the agricultural value chain, covering production, inputs supply, storage, processing, logistics and marketing.
* Others included MSMEs in the real sector including manufacturing, ICT, mining, petrochemicals and the creative industry as well as other activities as the CBN may determine from time to time.
How to access fund
The application of the Fund shall be categorised into three broad components. They are debt, equity and developmental components.
• The debt component shall constitute 50% of the fund which shall be disbursed as financings to eligible businesses through Non-Interest Deposit Money Banks.
*Asset purchased shall be registered with the National Collateral Registry (NCR).
* Financing limit: N10,000,000
* Mark-up: 5% per annum
* Tenor: Up to 7 years (depending on the nature/gestation period of the
* Moratorium: Maximum of 18 months for principal and 6 months on mark-up.
* Duly completed application form.
* Bank Verification Number (BVN).
* Certificate of Training from recognised Entrepreneurship Development Institution (EDI) or evidence of membership of organised private sector association.
* Letter of Introduction from any of the following: Clergy, Village Head, District Head, Traditional Ruler, senior civil servant etc (for individuals, microenterprises only).
* Evidence of registration of business name or certificate of incorporation and filing of annual returns (where applicable) in compliance with the provisions of the Companies and Allied Matters Act (1990).
Last month, the CBN announced that it has unveiled a framework that will integrate a non-interest window in all its intervention programmes aimed at supporting businesses and households that have been impacted negatively by the COVID-19 pandemic.
In a statement, the apex bank said the integration will focus mainly on its Anchor Borrowers’ Programme (ABP) as well as the Targeted Credit Facility (TCF).
Why it matters: The Scheme will be for start-ups, business expansion or revival of ailing companies and shall be in compliance with provisions of BOFIA (1991) as amended and the principles underpinning operations of NIFIs.
“The MSMEDF for NIFIs guidelines are aimed to channel low return funds to the MSME sub-sector of the Nigerian economy through participating Financial Institutions (PFIs) to enhance access by MSMEs to financial services.
“Similarly, the non-interest guidelines for the AADS are aimed at engaging a minimum of 370,000 youths in agricultural production across the country between now and 2023, in order to reduce unemployment among the youth in the country,” it added.
While the specific objectives of the MSMEDF for NIFIs are to increase the productivity and output of microenterprises, job creation and engender inclusive growth, those of the AADS are to increase agricultural production towards food security, job creation and economic diversification.
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* It is targeted at Nigerian youth between 18 and 35 years, seek to promote interaction among state governments, the CBN and other stakeholders in the agricultural value chain in each state.
* To enhance job creation in the agricultural sector, with focus on two crops where States have comparative advantage.
* Others were the Real Sector Support Facility (RSSF) revised guidelines (V3); the Real Sector Support Facility (RSSF) among others.