Lagos, Nigeria, December 11, 2017// – The Bankers’ Committee, an umbrella body of Central Bank of Nigeria’s (CBN) officials and managing directors of deposit money banks (DMBs), has adjusted the pricing and disbursement of the special N26.4 billion agric fund it unveiled early this year.
Godwin Emefiele, CBN governor, disclosed this on Sunday while briefing newsmen after the 9th Bankers’ Committee Retreat in Lagos.
He said the committee had decided that artisans like makeup artists, tillers and hairdressers would benefit from the scheme, and that the tenor and pricing of the loan had been reviewed.
Emefiele said the new scheme came after it was observed that farmers were not coming to access the fund and that the Bankers’ Committee deemed it fit to channel it towards rejuvenating the SME and small manufacturers’ segments of the economy which, he said, represented 95 percent of businesses in the country.
Emefiele said the N26.4 billion fund would be shared into two for both the SME segment and the small manufacturers’ segment.
The fund came out of the contributions of five percent of banks from their annual profit after tax and was initiated last financial year.
The loan, which would now be for a minimum of seven years, would be given to these artisans at five percent.
In terms of pricing, the Bankers’ Committee said it should not be more than five percent for those who were going to have it. But it would be meant primarily for small businesses.
What was agreed was that out of the fund, at least 50 percent would be set aside for direct SME disbursement.
“By April this year, we were able to put together about N26 billion, but as we speak, even at this time, not one penny of that fund has been disbursed.
“It was a shame, according to the views expressed, that for a year we will have N26.4 billion sitting in the CBN whereas there are people who needed access to funding.
“We decided to re-evaluate the conditions under which the facilities were to be made available.
“It was meant to be just equity, but we found out that because of certain apathy on the part of people who have businesses and would have wanted to be part of it, most people shied away from the equity fund”, he said.
Continuing, the CBN boss said, “So we decided to amend it. The review ended up being an amendment.
“We decided that the fund needed to be reviewed completely.
“It must be in a way that we must improve access for people who need the facility that it must be done in a very speedy manner, so that those who need it can get it in good time, so that they can run their business.
“Indeed, that this fund must be affordable, and if possible, best possible pricing, so that it can be seen as the contribution of the Bankers’ Committee towards national development.
“We also looked at the issue of what would be the tenor of this.
“We said for SMEs and agric businesses that want to access this fund, the tenor must be long enough and minimum seven years, providing for a certain moratorium so that those who are going to access the fund can do so at low pricing and at a tenor that would give them ample time to be able to repay.
“Under the direct SME disbursement, we said banks must set up MSME desks.
“On the part of the CBN, the central bank has entrepreneurial development centres in the six geo-political zones in the country and the central bank on its part would make its Enterprise Development Centres available to train people that would benefit from the scheme.”
He added that the Bankers’ Committee retreat also looked at the governance principles around the pricing and it was agreed that the fund must be development-oriented and that it must be a non-profit maximisation scheme with a professional and transparent management process around it.
He said the retreat also agreed that under the governance principles, it must be seen to be sustainable and the fund must have a life and, if possible, it must be in perpetuity.
According to Emefiele, “First, that it should no longer be equity fund and we agreed that we should tweak it so that it would be some form of preference share arrangement or like a debt structure which makes it easy for those who want to access it.
“In which case every year, banks must contribute. That means the fund would continue to grow.”
CBN Revamps N500bn Stimulation Fund To Promote Non-Oil Export
Meanwhile, in its bid to diversify the country’s economy from oil and in line with the Federal Government’s economic plan, the CBN has announced the revamp of the N500 billion export stimulation fund meant for the promotion of non-oil exports in the country using the Anchor Borrowers’ Programme model.
The bank has introduced a N50 billion direct intervention funding for the Nigeria Export-Import Bank (NEXIM).
Godwin Emefiele, governor of the CBN, disclosed at the weekend while addressing newsmen following a meeting in Lagos with banks and exporters operating in the non-oil sector.
He explained that the intervention was in furtherance of the country’s efforts to diversify the economy and develop sources of foreign exchange in addition to earnings from crude oil.
He said this effort was expected to increase the volume of non-oil exports, which would subsequently increase the amount of foreign exchange inflow into the economy.
“We want to encourage exporters with the N500 billion export facility to increase the volume of export earnings that is routed back to the economy to help us grow the economy,” he stated.
Emefiele identified the agricultural sector as critical and one that should be developed in the country’s effort to diversify the economy because that was the sector that historically sustained Nigeria’s economy before the advent of oil.
He said the new programme would encourage a policy of value addition to agricultural produce before export rather than the current situation of exporting raw unprocessed produce.
Accordingly, he said a team comprising of NEXIM, the Development Finance Department of the CBN, and the Office of the Special Adviser to the CBN Governor on Agriculture had been constituted to review the existing framework for the stimulation fund on how it would be disbursed, to make it all-encompassing.
He added that the current effort was hinged on a policy of produce, add-value and export (PAVE) aimed at encouraging exporters to advance beyond merely exporting raw materials to adding value to the products through processing exportable items.
Explaining the rationale for this approach, the governor noted that the processing of agricultural produce before export would create jobs for Nigerians and generate revenue for the country.
Speaking further, the governor identified some of the agricultural produce that would be supported with the funds to include cocoa, cashew nuts, palm produce, sesame seeds and rubber.
He added that the solid minerals sector would also benefit from the facility.
As additional means of both creating jobs and increasing exports, he added that the CBN would provide needed support to revive erstwhile exporting companies of processed agricultural produce that are now moribund.
While acknowledging incidences of undocumented export transactions in the system, he called on the exporters to desist from such adding that only documented export transactions would be funded by the intervention.
Emefiele further stated that before the funding was provided to the exporters, they would have to commit, through their banks and NEXIM, the volume of export earnings to be routed back to the country to support economic activities and other foreign exchange commitments.
A detailed framework for the disbursement of the funds is expected to be released shortly.
Independent.ng
