The Central Bank of Nigeria (CBN) has established a N300bn real sector support facility, in a bid to unlock the potential of the sector to engender output growth, value-added productivity and job creation.
The CBN, in a circular on Wednesday, said the facility would be used to support large enterprises for startups and expansion financing needs of N500m up to a maximum of N10bn.
The real sector activities targeted by the facility are manufacturing, agricultural value chain and selected service sub-sectors, the bank said.
According to the circular, the objectives of the facility are to improve access to Nigerian Small and Medium-scale Enterprises to fast-track the development of the manufacturing, agricultural value chain and services sub-sectors of the economy.
This is also expected to increase output, generate employment, diversify the revenue base, increase foreign exchange earnings and provide inputs for the industrial sector on a sustainable basis.
The CBN said its Development Finance Department shall be responsible for the day-to-day administration of the facility.
It said activities to be covered under the facility are new, startups and expansion projects in the manufacturing, agricultural value chain (non-primary production) and services.
“Any entity is adjudged to be a ‘manufacturer’ if it is involved in the production and processing of tangible goods; fabricates, deploys plants, machinery or equipment to deliver goods or provide infrastructure to facilitate economic activity in the real sector; and such entity must not be involved in the financial services industry,” the CBN said.
According to the bank, the manufacturers include SMEs defined as entities with an asset base (excluding land) of between N5m and N500m and with labour force of between 11 and 300.
“Trading activities shall not be accommodated under this facility,” the CBN said.
The participating financial institutions are all deposit money banks and Development Finance Institutions, according to the bank.
“A borrower shall meet the following criteria to be eligible: any entity falling within the definition of an SME and/or manufacturer; an entity wholly-owned and managed Nigerian private limited company registered under the Companies and Allied Matters Act of 1990; a legal business operated as a sole proprietorship; be a member of the relevant organised private sector associations such as MAN, NASME, NACCIMA, NASSI, e.t.c.”
“Loan amount is minimum of N500m up to a maximum of N10bn for a single obligor. Any amount above N10bn requires the special approval of management.”
The CBN said the facility shall be administered at an all-in interest rate of 9 per cent per annum payable on quarterly basis.
“Specifically, the CBN shall be entitled to earn 3 per cent as interest and the banks, a 6 per cent spread. Repayments under this facility shall be amortised.
“Loans shall have a maximum tenor of 15 years depending on the complexity of the project and shall terminate on December 31, 2030. Each project tenor shall be determined in relation to its cash flow and life of the underlying collateral.”
The Lagos Chamber of Commerce and Industry had in its response to the closure of the Retail and Wholesale Dutch Auction System foreign exchange window urged the CBN to provide a refinancing facility of N200bn for real sector investors with high forex exposure exposure.
