The Central Bank of Nigeria (CBN) has unveiled series of guidelines for Non-Interest Financial Institutions under its Agri-Business, Small and Medium Enterprise Investment Scheme (AGSMEIS), Micro, Small and Medium Enterprises Development Fund (MSMEDF), the Accelerated Agricultural Development Scheme (AADS) and seven other intervention schemes in its bouquet.
The issuance of the ten guidelines is a sequel to plans disclosed by the Bank in its June 2020 meeting to unveil a framework that will integrate non-interest window in all its intervention programs aimed at supporting businesses and households that have been impacted negatively by the coronavirus (COVID-19).
The Bank, in the guidelines for the Operations of the Agri-Business, Small and Medium Enterprises Investment Scheme (AGSMEIS) for Non-Interest Financial Institutions (NIFIs) issued in Abuja on Tuesday, July 14, 2020, revealed the creation of a Fund to be known as ‘AGSMEIS Non-Interest Fund’ to be domiciled in a dedicated account with the CBN.
The guidelines stipulate that each Non-Interest Deposit Bank (full-fledged or window) is to set aside 5% of its profit after tax (PAT) annually as a contribution to the Fund. It added that each Non-Interest Deposit Bank is also to transfer its contribution to the CBN not later than 10 working days after the Annual General Meeting (AGM) of the participating bank.
Eligible activities under the Scheme are businesses across the agricultural value chain, covering production, inputs supply, storage, processing, logistics, and marketing; MSMEs in the real sector including manufacturing, mining, and petrochemicals; MSMEs in the service sector including information and communication technology (ICT) and the creative industry as well as other activities as the Central Bank of Nigeria (CBN) may determine from time to time.
According to the guidelines, financing under the Scheme will be for start-ups, business expansion or revival of ailing companies and shall be in compliance with provisions of BOFIA (1991) as amended and the principles underpinning operations of NIFIs
The MSMEDF for NIFIs guidelines is aimed to channel low return funds to the MSME sub-sector of the Nigerian economy through participating Financial Institutions (PFIs) to enhance access by MSMEs to financial services.
Similarly, the non-interest guidelines for the AADS are aimed at engaging a minimum of 370,000 youths in agricultural production across the country between now and 2023, in order to reduce unemployment among the youths in the country.
While the specific objectives of the MSMEDF for NIFIs are to increase the productivity and output of microenterprises, job creation and engender inclusive growth, those of the AADS are to increase agricultural production towards food security, job creation, and economic diversification.
The non-interest guidelines for the AADS, which is targeted at Nigerian youth between 18 and 35 years, seek to promote interaction among state governments, the CBN and other stakeholders in the agricultural value chain in each state to enhance job creation in the agricultural sector, with focus on two crops where States have a comparative advantage, among others.
Other non-interest guidelines issued by the CBN on Tuesday were for the Anchor Borrowers’ Programme: the Credit Support for the Health Sector; Intervention in the Textile Sector; the Real Sector Support Facility (RSSF) revised guidelines (V3); the Real Sector Support Facility (RSSF) through CRR; Non-Oil Export Stimulation Facility (ESF) and the Creative Industry Financing Initiative (CIFI).
Speaking on the guidelines issued by the Bank, the Director, Corporate Communications Department, Isaac Okorafor said the establishment of the non-interest windows had opened more opportunities for eligible beneficiaries to be considered for funding under all the Bank’s initiatives.