By Etuka Sunday
On April 12, 2018, the Central Bank of Nigeria (CBN) in collaboration with the Bankers’ Committee flagged off disbursement of N26billion to the first set of beneficiaries under the Agribusiness/Small and Medium Enterprises Investment Scheme (AGSMEIS).
The Scheme was designed following the high rate of unemployment in the country as shown by the data from the National Bureau of Statistics (NBS) during the third quarter of 2017.
Its associated risks to collective peace and progress in the country if nothing positively was done, moved the Bankers Committee to design the 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.
Following that development, the Bankers’ Committee at its 331st meeting held on February 9, 2017, 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.
CBN Governor, Mr Godwin Emefiele who flagged off the scheme in Abuja expressed satisfaction for the funds to have gotten to the stage of disbursement to the beneficiaries.
“I am 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,” he said.
The apex bank governor said: “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.
Emefiele said: “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.”
According to him: “Other funding initiatives implemented in the past by the Bankers’ Committee includes the Small and Medium Equity Investment Scheme (SMEEIS), approved at its 246th meeting held on 21st December 1999. 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,” he said.
Pivotal to such lessons, according to him, 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.
He said, 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.
He emphasized 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 3 years before divestment. Finally, the developmental component of the scheme shall be used for capacity building and technical assistance to support beneficiaries,” he said.