CBN unveils N300 billion real sector support facility

A FRESH vista of opportunity may have been opened for the real sector operators as the Central Bank of Nigeria (CBN) unveiled a N300 billion real sector support facility.

  The initiative, which is part of the efforts of CBN to unlock the potential of the real sector, would also engender output growth, value added productivity and job creation.

  According to CBN, the facility will be used to support large enterprises for startups and expansion financing needs of N500 million up to a maximum of N10 billion.

  It would be recalled that CBN had in August 2014, unveiled the N220 billion Micro Small and Medium Enterprises Development Fund, which was scripted to provide needed fund for small enterprises with bias for enterprises owned by women.

 The real sector activities, under the latest initiative, are manufacturing, agricultural value chain and selected service sub-sectors.

  The unveiling of the scheme, along with the guidelines, was aimed at improving access to finance by Nigerian SMEs to fast-track the development of the manufacturing, agricultural value chain and services sub-sectors of the Nigerian economy.

  It was also targeted at increasing output, generate employment, diversify the revenue base, increase foreign exchange earnings and provide inputs for the industrial sector on a sustainable basis.

  However, the fund has been placed under the supervision of the Development Finance Department of CBN, which shall be responsible for the day-to-day administration of the facility.

  The activities to be covered under the facility are new, startups and/or expansion projects in manufacturing, which shall be any entity adjudged to be 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.

  The entity must not be involved in the financial services industry.

  The manufacturers include Small and Medium Scale Enterprise (SMEs) defined as an entities with an asset base (excluding land) of between N5 million and N500 million and with labour force of above 11.

  It would also include the agricultural value chain; services- hospitals, schools and hotels, but excluding trading.

  The facility will be long-term structure for acquisition of plant and machinery; working capital, while eligibility for participating financial institutions include all Deposit Money Banks and Development Finance Institutions.

  Also, the borrower eligibility includes SME and/or manufacturer; wholly-owned and managed Nigerian private limited company registered under the Companies and Allied Matters Act of 1990; legal business operated as a sole proprietorship; and may be a member of the relevant Organised Private Sector associations.

  The loan amount is a minimum of N500 million up to a maximum of N10 billion for a single obligor, while any amount above N10 billion requires the special approval of management.

  The facility shall be administered at an all-in interest rate/charge of nine per cent per annum payable on quarterly basis.

  Specifically, the Central Bank of Nigeria shall disburse the facility to Deposit Money Banks at three per cent interest rate and the DMBs shall have a six per cent spread.