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In order to promote access credit by manufacturers and Small and Medium Enterprises (SMEs) in the country, the Central Bank of Nigeria (CBN) has approved the establishment of a N200 billion Small and Medium Enterprises Credit Guarantee Scheme (SMECGS).
The CBN said this is aimed at unlocking the tight credit market in Nigeria, enhance credit to the real sector, and complement its N500 billion Power/Manufacturing facility to Nigerian.
CBN’s Head of Corporate Communications, Mohammed M. Abdullahi said the scheme will be solely funded and managed by the CBN in order to ensure that the desired objective of the scheme is achieved.
He explained that the main objectives of the scheme are to: fast-track the development of SME/Manufacturing sector of the Nigerian Economy by providing guarantees; set the pace for industrialisation of the Nigerian economy; increase the access to credit by promoters of SMEs and manufacturers; and generate employment.
He stated that activities to be covered under the scheme include Manufacturing; Agricultural Value Chain; Small and Medium Scale Enterprises (SMEs) with assets not exceeding N300 million and labour force of 11 to 300 persons.
Others are private educational institutions; processing packaging and distribution of primary products; and any other activity as may be specified by the managing agent from time to time. As an exception, trading activities are not covered by the scheme.
Abdullahi added that the maximum amount that would be guaranteed under this scheme is N100 million which can be in the form of working capital, term loans for refurbishment/equipment upgrade/expansion, overdrafts, among others.
He added that the guarantee cover shall be 80 per cent and shall be valid up to the maturity date of the loan with a maximum tenure of five years.
On eligibility criteria for participation in the scheme, Abdullahi stated that all deposit money banks and development banks shall be eligible to participate in the scheme. But added that banks are expected to conduct due diligence on any applications received and ensure that adequate collateral are taken to secure the facilities taken by promoters.
He stressed that SME promoters and manufacturers must belong to any of the private sector associations such as Nigerian Association of Small and Medium Scale Enterprises, Manufacturers Association of Nigeria, National Association of Small Scale Industries and such others.
He disclosed that the lending rate under the scheme shall be market driven. It is however expected that banks would lend at their Prime Lending Rate (PLR) in view of the fact the CBN is sharing the credit risk with the banks by providing this guarantee.
In order to promote access credit by manufacturers and Small and Medium Enterprises (SMEs) in the country, the Central Bank of Nigeria (CBN) has approved the establishment of a N200 billion Small and Medium Enterprises Credit Guarantee Scheme (SMECGS).
The CBN said this is aimed at unlocking the tight credit market in Nigeria, enhance credit to the real sector, and complement its N500 billion Power/Manufacturing facility to Nigerian.
CBN’s Head of Corporate Communications, Mohammed M. Abdullahi said the scheme will be solely funded and managed by the CBN in order to ensure that the desired objective of the scheme is achieved.
He explained that the main objectives of the scheme are to: fast-track the development of SME/Manufacturing sector of the Nigerian Economy by providing guarantees; set the pace for industrialisation of the Nigerian economy; increase the access to credit by promoters of SMEs and manufacturers; and generate employment.
He stated that activities to be covered under the scheme include Manufacturing; Agricultural Value Chain; Small and Medium Scale Enterprises (SMEs) with assets not exceeding N300 million and labour force of 11 to 300 persons.
Others are private educational institutions; processing packaging and distribution of primary products; and any other activity as may be specified by the managing agent from time to time. As an exception, trading activities are not covered by the scheme.
Abdullahi added that the maximum amount that would be guaranteed under this scheme is N100 million which can be in the form of working capital, term loans for refurbishment/equipment upgrade/expansion, overdrafts, among others.
He added that the guarantee cover shall be 80 per cent and shall be valid up to the maturity date of the loan with a maximum tenure of five years.
On eligibility criteria for participation in the scheme, Abdullahi stated that all deposit money banks and development banks shall be eligible to participate in the scheme. But added that banks are expected to conduct due diligence on any applications received and ensure that adequate collateral are taken to secure the facilities taken by promoters.
He stressed that SME promoters and manufacturers must belong to any of the private sector associations such as Nigerian Association of Small and Medium Scale Enterprises, Manufacturers Association of Nigeria, National Association of Small Scale Industries and such others.
He disclosed that the lending rate under the scheme shall be market driven. It is however expected that banks would lend at their Prime Lending Rate (PLR) in view of the fact the CBN is sharing the credit risk with the banks by providing this guarantee.
