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BANKING AND FINANCE

Bankers’ Committee Revs MSMEs Operations

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In this piece, MARK ITSIBOR reports that the disbursement of facilities to over 380 young entrepreneurs by the Bankers’ Committee last week, will reduce the huge financing gap for MSMEs and indeed, change the perception of banking operation in Nigeria

The worsening unemployment rate in the country obviously poses grave concerns and risks for the collective peace and progress of all Nigerians. Beyond poor educational standard, there is an overwhelming deficit of credit to the informal sector. Ugliness is in its shadow. But for thousands of potential young entrepreneurs, dreams to become business owners, burst the cycle of poverty and uncertainty to even become employers of labour have indeed, come alive through divine providence and intervention of the Bankers’ Committee, chaired by Governor of the Central Bank of Nigeria, Mr. Godwin Emefiele.

The informal sector of the Nigerian economic is prostrate and many operators of Macro Small and Medium Enterprises (MSMEs) are faced with the major challenge of funds to finance their businesses. At a time voices are high that the informal sector – the main stay of the nation’s economy is about to finally go into extinction with its resultant effect on unemployment and poverty, the nation’s Bankers’ Committee has intervened. At its 2016 Retreat, the Committee decided to design and fund a suitable scheme that will not only reduce the huge financing gap for MSMEs but also fully commits to the pursuits of job creation, financial inclusion and inclusive growth for Nigerians, particularly the teeming youth population. It sees beauty in thousands of empowered youths in the country.   It was on this premise that the Bankers’ Committee came up with the Agribusiness Small and Medium Enterprises Investment Scheme (AGSMEIS) in 2017 as an initiative to improve access to affordable financing for MSMEs, particularly those operating in the informal sector of the economy and to support the Federal Government’s efforts and policy measures to promote sustainable economic development and employment generation. 

As a commitment to the successful implementation of the Scheme, all Deposit Money Banks (DMBs), voluntarily agreed to set aside and contribute 5 per cent of their Profit After Tax (PAT) annually to finance eligible projects under the Scheme. As it stands, the size of the Fund stands at about N26 billion and this is expected to exceed N60 billion by June 2018.    The Committee has beat everyone, including the targeted audience to surprise. Last week, it flagged off the disbursement of funds and equipment to the first tranche of beneficiaries under the AGSMEIS that was established by the Committee in 2017.

About 388 people benefited from the first disbursement of the N118 million Central Mr. Emefiele said was used to procure different implements for the youths who have been trained on various entrepreneurship, vocational and management skills across the country to enable them practice their vocations upon completion of their vocational training.   The beneficiaries are graduate trainees from various Entrepreneurship Development Institutions and Centres including Fate Foundation, Lagos Business School, House of Tara and Thrive Agric. Emefiele believes the outcome of last week’s engagement will in no half measures, significantly reduce youth unemployment and restiveness, increase social cohesion and drive inclusive economic growth.    

The CBN Governor implore all the beneficiaries and all youths that will key into the Scheme to take good advantage of the opportunities made available to them and to utilize the funds judiciously, according to the terms of the loan agreements.    Guarantee Trust Bank MD, Segun Agbaje who spoke on behalf of the banks’ MDs said “we feel extremely privileged and proud to have contributed” to the funding of the scheme. He said AGSMEIS is one of the several kinds of initiatives of the Committee for SMEs operators. Mr. Agbaje added, “I and my colleagues have resolved to change the narrative of how banks are seen.” To many, the commencement of the disbursement is a testament to fulfilling a promise to the informal sector and the Nigerian youth.   

Agbaje caught the feelings of one of the newest Tara Beauty Entrepreneur, Stella Ajige who proclaimed in affirmation that the singular act has indeed changed her life. With lots of doubt and excitement, Ajige said she made the long trip down from Lafia Nasarawa state to Abuja to be part of what she described as amazing experience. “With doubt because we had come to believe that in Nigeria you to receive. In this case,  I never gave so why was I receiving?  I got into Abuja and was offered the hospitality,” she said in testimonial to the potential positivity of the intervention of the Bankers’ Committee.   Beyond disbursement of the funds and implements, Emefiele spoke right into the hearts of all the entrepreneurs.

“Every word the CBN Governor said was an inspiration pass this dream to yet more people and there I sat in same room with him.  Just when I thought I have had enough motivation in one day came an opportunity to see Tyler Perry’s ‘ACRIMONY’…perfect finish to an already perfect day…,” Ajige confessed. “Thanks a lot Tara and CBN. I am keeping this experience for life,” She said on behalf of her colleagues.   In Nigeria, the challenges of youth unemployment and restiveness must be confronted with strategic innovative thinking to provide sustainable solution. However, no matter how daunting the challenge might seem, Emefiele believes that with unity of purpose Nigeria can fight the scourge.   For him, one of the most effective ways to tackle this scourge, is through entrepreneurship development and easy access to affordable financing. Yet, access to finance has been an Achilles heel on entrepreneurship development in the country today. A situation often credited to financial intermediaries’ apathy to youth entrepreneurship and startups, which are usually perceived as being too risky, lacking relevant managerial skills and not possessing adequate collaterals acceptable for conventional credit.    According to the CBN Boss, the commencement of funds disbursement under the AGSMEIS, continues a tradition of voluntary initiatives by the Bankers’

Committee to promote developmental programs for sustainable economic growth. Other funding initiatives implemented in the past by the Bankers’ Committee includes the Small and Medium Equity Investment Scheme (SMEEIS), approved at its 246th meeting held on 21st December 1999.    More recently, the CBN and the banking sector are collaborating on a national Shared Agent Network program, designed to ramp up access to basic financial services such as cash-in, cash-out, funds transfer, bill payments, airtime purchase and government disbursements to an estimated 50 million persons who are currently either under-banked or unbanked. This initiative in partnership with licensed mobile money operators and super agents is expected to roll out about 500,000 Shared Agent Networks within two years through the use of mobile technology.    Under the Direct component of the AGSMEIS, beneficiaries can access loans to a limit of N10 million, at interest rate of 5 per cent per annum and a maximum tenor of up to 7 years. There is also a moratorium period of 18 months on principal and 6 months on interest element, depending on the nature of the business. However, it is mandatory that all loan beneficiaries must have valid BVN, which shall be registered on the National Collateral Registry and used to track repayments and blacklist any defaulters.    The interest rate of 5 per cent per annum being offered under the AGSMEIS Emefiele said further attests to the unflinching commitment of the deposit money banks to support entrepreneurs to actualize their dreams and ensure that the twin goals of increased employment and poverty reduction are attained.

Beneficiaries can access equity and quasi-equity investments of up to 10 years with an initial lock up period of 3 years before divestment.    “The developmental component of the scheme shall be used for capacity building and technical assistance to support beneficiaries,” he stated while addressing beneficiaries of the Scheme.   In the past three years, aside from the initiatives of the Bankers’ Committee, the CBN has also designed and implemented developmental initiatives, few of which include the Anchor Borrowers’ Programme which has seen about N80 billion disbursed to over 358,000 small holder farmers in 34 states, cultivating 8 commodities.



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