Access To Finance: Nigeria CBN’s Targeted Credit Facilities

50 BILLION TARGETED CREDIT FACILITY

On March 23, 2020, The Central Bank of Nigeria introduced the N50 billion Targeted Credit Facility(TCF) as a stimulus package to support households and micro, small and medium enterprises (MSMEs) affected by the COVID-19 pandemic. Further to this, a circular was issued to deposit money banks and the general public by the Director, Finance policy and Regulation department, Kevin N. Amugo stating the guidelines for implementation.

The objective of this facility is to limit the adverse effect of Covid-19 pandemic on households and MSMEs by providing support for those whose economic activities have been significantly disrupted.

Scope of the facility

The guideline specifically stated the activities and participants eligible for the support facility. Only households and enterprises with verifiable evidence of its activities adversely impacted by the COVID-19 pandemic are eligible.

Activities covered by the scheme includes;

• Agricultural value chain activities
• Hospitality (accommodation and food services)
• Health (pharmaceuticals and medical supplies)
• Airline service providers
• Manufacturing/value addition
• Trading
• Any other income-generating activities as may be prescribed by the CBN.
• Authorized limit

For SMEs, the determinant factors for the amount of loan amount are the activity of the business, inflow & outflow of cash and industry size of the business. However, the maximum amount that can be granted is N 25 million.

• Repayment Policies

Repayment shall be made on an installment basis by the beneficiaries according to the nature of the enterprise and the repayment schedule provided at the application stage.

The rate applicable is 5% per annum up till 28th February 2021, and then 9% from 1st March 2021.

• Loan duration

The short term loan is for a maximum period of one year and there is no option for rollover. The long term loan is for a maximum period of three years with, at least, one-year moratorium.

• Loan Requirements

1. A loan application letter.
2. Completed application form.
3. Guarantor Form.
4. Valid means of identification (National ID, voters’ card, driver’s license, or international passport).
5. Current utility bill (from the applicant and guarantor).
6. Two recent passport-sized photographs.
7. Bank Verification Number (BVN)

• Exit Date

The exit date of the facility is 31st December 2024.

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2. CBN’s CREDIT SUPPORT FOR THE HEALTHCARE SECTOR

On March 25, 2020, The Central Bank of Nigeria introduced the N100 billion Credit Support to the healthcare sector for indigenous pharmaceutical companies and healthcare practitioners intending to build and expand capacity.

Explicitly, the credit support is directed to local pharmaceutical companies and other health care service providers with the aim of increasing private and public investment in the healthcare sector, facilitate improvement in healthcare delivery and reduce medical tourism to enhance foreign exchange conservation.

The objective of this facility is to enable local pharmaceutical companies to expand their operations & comply with WHO’s Good Manufacturing Practices, as well as, support the provision of shared services through a one-stop healthcare solution to enhance competition and reduce the cost of healthcare delivery in the country.

• Scope of the facility

The guideline specifically stated the activities and participants eligible for credit support.

Participants covered under the scheme are;

1. Healthcare product manufacturers — pharmaceutical drugs and medical equipment;
2. Healthcare service providers/medical facilities: hospitals/clinics, diagnostic centers/laboratories, fitness and wellness centers, rehabilitation centers, dialysis centers, blood banks, etc.
3. Pharmaceutical/medical products distribution and logistics services; and
4. Other human healthcare service providers as may be determined by the CBN from time to time.

Activities covered under the scheme are;

1. Manufacturing of pharmaceutical drugs and medical equipment; Establishment/expansion/upgrade of basic and specialized healthcare facilities;
2. Medical/pharmaceutical supplies.
3. Medical/pharmaceutical Research and Development (R&D).
4. Distribution of medical/pharmaceutical drugs and supplies.
5. Manufacturing of medical/pharmaceutical drugs distribution technology; and Any other healthcare value chain activity as may be prescribed by the CBN from time to time.

• Loan policies

1. Authorized limit

Short term support is 20% of the average of 3 years of the company’s turnover. However, the maximum amount that can be granted is N 500 million per obligor. Long term support has a maximum of N2 billion per obligor.

2. Repayment Policies

Repayment shall be made on an installment basis by the beneficiaries according to the repayment schedule provided at the application stage. The rate applicable is 5% per annum up till 28th February 2021 and then 9% from 1st March 2021.

3. Loan duration

The short term loan is for a maximum period of one year, with provision for rollover not more than three (3) years. The long term loan is for a maximum tenor of Ten (10) years with, at most, a one-year moratorium on repayment. However, in the case of construction, the tenor shall be determined by the completion date.

4. Exit Date

The exit date of the facility is 31st December 2030.

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3. CBN’s AGSMEIS

The Central Bank of Nigeria is giving collateral-free loans of up to N10 million to small businesses in a scheme called; Agric-Business/Small and Medium Enterprises Investment Scheme (AGSMEIS).

Agric Small and Medium Enterprise Scheme (AGSMEIS) is an initiative of the Bankers’ Committee in a bid to support and complement the Federal Governments’ efforts at promoting Agri-businesses/Small and Medium Enterprises as a vehicle for sustainable economic development and employment generation. AGSMEIS was introduced by the Banker’s committee on February 9, 2017.

The goals of this scheme is to provide access to finance for SMEs, generate employment opportunities, develop agricultural value chains & sustainable agricultural practices. Also, the scheme is directed to Agri-business & SMEs with the aim of boosting managerial capacity as pipelines of growing enterprises that can become huge corporate organizations.

• Scope of the facility

The guideline specifically stated the activities and participants eligible for the support facility.

Activities covered by the scheme include;

1. Businesses across the agricultural value chain, covering production, inputs supply, storage, processing, logistics, and marketing.
2. MSMEs in the real sector including manufacturing, mining, and petrochemicals.
3. MSMEs in the service sector including information and communication technology (ICT) and the creative industry.
4. Other activities as the Central Bank of Nigeria (CBN) may determine from time to time

• Authorized limit

The maximum amount that can be granted is N 10 million.

• Repayment Policies

Repayment shall be made on an installment basis by the beneficiary according to the repayment schedule provided at the application stage. The rate applicable is 5% per annum

• Loan duration

The loan tenor has a maximum of 7 years depending on the nature of the project. There is an option for Moratorium subject to a maximum of 18 months for principal and 6 months on interest.

• Loan Requirements

1. Duly completed application form.
2. Bank Verification Number (BVN).
3. Certificate of Training from recognized Entrepreneurship Development Institution (EDI) or evidence of membership of organized private sector association.
4. Letter of Introduction from any of the following, Clergy, Village Head, District Head, Traditional Ruler, senior civil servant, etc. (for individuals/micro enterprises only).
5. 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).
6. Tax Identification Number (TIN) and current Tax Clearance Certificate (TCC) Where applicable.

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Thinking of accessing any of these funds but do not have complete or accurate financial records to back up your applications, send us an email at team@accounteer.com and we will get back to you or visit Accounteer.com to chat with any of our team for a quick assistance