The Central Bank of Nigeria has expressed concern that “not a penny” of the N26 billion Agri-Business, Small and Medium Enterprises Investment Scheme (AGSMEIS) has been disbursed nearly one year after its establishment, even as it expects the fund to hit N60 billion by the end of the year.
To the end, it said the framework for accessing the fund as well as the N220 billion Micro Small and Medium Enterprises development fund is being reviewed to allow easy access by small businesses at an even cheaper rate.
Rising from the ninth edition of the Bankers Committee annual retreat in Lagos, the Governor of the CBN, Mr Godwin Emefiele said the structure of the AGSMEIS which was designed to be an equity fund will change effective next year to ensure that at least N13 billion of the fund is disbursed by February next year and another N25 billion by April next year.
Although the AGSMEIS was initially specified for agricultural related businesses, Emefiele said the Bankers Committee which comprise of banks and financial institutions chiefs as well as regulators, agreed to extend the fund to small businesses and artisans as a measure to stimulate the Nigerian economy towards growth.
According to him, barbers, hairdressers, make-up artists, and other small business ventures will have access to 50 per cent of the fund. This means by the end of the year, about N30 billion will available through banks for on-lending to small businesses at five percent payable over a period of seven years.
He however noted that there will not be direct cash disbursement as the larger part of the fund released will be used to purchase the needed equipment and tools of trade wile a smaller portion will be given as running costs.
“There are those who want to go into barber shop business, hair dressing business, we want to make this fund available to them,” he stated adding that the CBN through its Enterprise Development Center (EDC) in conjunction with the National Youth Service Corps and other government entrepreneurship training agencies will provide training for the small business owners who want to access the fund.
“In fact we are going to bring tiling for those who want to do tiling, you will learn tiling and we will give them equipment for the tiling. You want to do POP plastering and so on, we will bring them in because we feel these are the week and vulnerable people that need assistance that may not even have the opportunity of working at the bank and that will need to open a channel through which they can a bank and access facilities from the bank.”
Asides this, he said the apex bank will set up a risk sharing body just as it did for agric sector with the Nigeria Incentive Based Risk Sharing System for Agricultural Lending (NISRAL) to ensure that banks do not carry the risks alone. Also, he said bank that lend more to the small businesses and small manufacturers will get incentives for doing so.
He said banks that have lent some percentage of their SME loan to the set of people in the target area, will “maybe have their CRR will be lower than other banks that have not reached that level. In other words, if you want us to ease your CRR to have more money to loan to these set of people, then certain per cent of your loans should go to this people.”
He also cautioned small business owners who will be beneficiaries of the fund to ensure that they pay back their loans as at when due as the Bank Verification Number system and the Credit Reporting System will make it easy to track loan defaulters. He said defaulters of the fund will be blacklisted and not allowed any form of credit within the Nigeria financial system.