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CBN Capitalises AGSMEIS

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As we all are aware, data from the National Bureau of Statistics (NBS) shows that the rate of unemployment in Nigeria worsened somewhat marginally during the third quarter of 2017. Reflecting the concerns and risks that this situation could pose for our collective peace and progress, we all committed, during the 2016 Bankers’ Committee Retreat, to design and fund a suitable scheme that will not only reduce the huge financing gap for Macro Small and Medium Enterprises (MSMEs), but also fully commits to the pursuits of job creation, financial inclusion and inclusive growth for Nigerians, particularly the teeming youth population

It was on this premise that the Bankers’ Committee came up with the Agribusiness Small and Medium Enterprises Investment Scheme (AGSMEIS) 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, voluntarily agreed to set aside and contribute 5 percent of their Profit after Tax (PAT) annually to finance eligible projects under the Scheme. As at today, the size of the Fund stands at about N26 billion and this is expected to exceed N60 billion by June 2018. I am, therefore, very delighted that we have come to this stage where we are ready to begin the disbursement of these funds to deserving beneficiaries. These beneficiaries are youths who have been trained on various entrepreneurship, vocational and management skills across the country by Entrepreneurship Development Institutions and Centres, such as Fate Foundation, Lagos Business School, House of Tara and Thrive Agric. Upon completion of their vocational training, the specific implements needed to practice their vocations, are procured under the scheme. The beneficiaries’ details including their Biometric Verification Numbers (BVN) are forwarded to the deposit money banks to confirm that they are their customers before accessing the fund.

It is indeed an auspicious occasion as the outcome of today’s engagement is expected, in no half measures, to significantly, reduce youth unemployment and restiveness, increase social cohesion and drive inclusive economic growth.

In Nigeria, the challenges of youth unemployment and restiveness must be confronted with strategic innovative thinking to provide sustainable solution. No matter how daunting the challenge might seem, I believe that with unity of purpose we can fight this scourge together.

There is no gainsaying the fact that 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.

I am quite aware that even with the quantum of funds already available, a few people are still raising eyebrows about the genuine commitment of the banking sector to the success of this Scheme. Indeed, there is a common cliché that describes a banker as “someone who lends an umbrella when the sun is shining and takes it back when it rains”. I will like to assure you all, that under the AGSMEIS, no bank will lend a beneficiary an umbrella and take it back during the rainy season.

Needless to say, 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).

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.

In designing the AGSMEIS, the Bankers’ Committee engaged with key stakeholders and relied on anecdotal evidence and lessons learnt from the implementation of the SMEEIS. Pivotal to such lessons, is that during a business life cycle, different types of financing are required, at the birth of the business, initial growth stage, expansion and mature operations phases.

In line with this, AGSMEIS has been designed to be implemented in three (3) broad components, namely Direct, Indirect and Developmental components.

Under the Direct component of the AGSMEIS, beneficiaries can access loans to a limit of N10 million, at interest rate of 5% 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.

At this junction, I must emphasize that the interest rate of 5% per annum being offered under the AGSMEIS 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.

Under the Indirect component of the Scheme, beneficiaries can access equity and quasi-equity investments of up to 10 years with an initial lock up period of three years before divestment.

Finally, the developmental component of the scheme shall be used for capacity building and technical assistance to support beneficiaries.

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’ Program – since its launch in November 2015, the Anchor Borrowers’ Program has so far achieved tremendous success in terms of outreach and coverage, making the scheme one of the most successful CBN Development Finance initiatives to date. Currently, about N80 billion has been disbursed to over 358,000 small holder farmers in 34 states, cultivating 8 commodities. The success of the Program has culminated in wealth creation for the small holder farmers, who hitherto had been crowded out of the formal financial system, deepening of markets and value addition along the value chain of the various commodities.

The National Collateral Registry – the registry was introduced to unlock access to credit, which has always been a major concern to MSMEs, particularly the micro enterprises which account for 99% of the 37.1 million MSMEs in the country. Since commencement of live operations in May 2016, 410 financial institutions have registered 26,899 financing statements valued at over N540 billion on the platform. I am very optimistic that the Collateral Registry will have tremendous impacts on MSME lending in Nigeria in the foreseeable future, particularly in the implementation of the AGSMEIS, as all equipment financed under the Scheme must be registered on the platform.

In conclusion, I am excited to inform us all, that this flag off ceremony will not be the usual symbolic handing over of large cardboard cheques, but physical distribution of equipment as required by beneficiaries to kick start their businesses.

– Being remarks by CBN Governor, Godwin Emefiele, at the flag-off ceremony for the disbursement of funds under the Agribusiness/Small and Medium Enterprises Investment Scheme (AGSMEIS)



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