The Bankers’ Committee has resolved
that the Central Bank of Nigeria (CBN) as well as deposit money banks would
jointly establish an Agriculture/SME Fund (AGSME Fund) from the contributions
of a portion of their profit after tax (PAT) to finance the two critical sectors
of the economy.
According to the CBN Governor Godwin
Emefiele, the modality for the fund, which will operate as an Equity Fund, will
be worked on by the Bankers’ Committee and be communicated to the public in due
course.’
The initiative, expected to take off
from January 1, 2017, coincides with moves by the Nigeria Deposit Insurance
Corporation (NDIC) working closely with the CBN to set up another resolution
mechanism for cleaning up banks’ non-performing loans (NPLs) when the terminal
life of the Asset Management Corporation of Nigeria (AMCON) expires by 2023.
The Managing Director of NDIC,
Alhaji Umaru Ibrahim, disclosed this during an oversight visit by members of
the House of Representatives Committee on Insurance and Actuarial Matters to
the corporation’s office in Lagos.
Emefiele unfolded the new initiative
on funding for agriculture and SMEs when he read the communique at the end of a
two-day Bankers’ Committee retreat titled: “Economic Recovery: The Role of the
Banking Sector,” in Lagos at the weekend.
Emefiele said the Sub-committee on
Economic Development and Sustainability of the Bankers’ Committee would
coordinate the execution of the programme and provide feedback to the central
bank and the Bankers’ Committee.
According to him, based on the
feedback, the CBN would release the operational guidelines for the AGSME fund.
“By our estimation, take-off is January
1, but those projects would not be available until around March or April next
year, after the banks’ audited accounts have been presented to the public.
Our initial experience is that you
don’t need more than N30 billion to start with,” Emefiele said.
He said the Bankers’ Committee
recognises the potential impact of agriculture, manufacturing and SMEs as
catalysts for rapid growth, job creation and poverty reduction to drive
inclusive growth and development of the economy.
He said the committee fully supports
President Muhammadu Buhari’s economic goals.
However, responding to a question on
why the need for a fresh initiative for SMEs’ funding when there was the Small
and Medium Industries Equity Investment Scheme (SMEIS), which used to be a
voluntary initiative of the bankers’ committee that required banks to set aside
10 per cent of their profit before tax (PBT) for equity investment and wasn’t
successful, the CBN governor explained: “You know in the past, we had the SMEIS
fund where the banks contributed a portion of their profit, but that scheme was
abandoned. So, we thought that this time that there is need to really stimulate
growth and because we also know that having equity funds by investors,
particularly local investors, has always been a thing in achieving the
objective of agriculture and SMEs, we decided that the banks and the CBN would
commit certain percentage of their funds to support this endeavour.
“The SMEIS fund was left in banks’
provision accounts. But this time, once the profit of the banks, like in this
case, their 2016 results, which would be out latest April 2017, they would
provide the percentage we would agree from their PAT and the fund would be
warehoused at the CBN. Hopefully, before or about that time, some of the
projects that we contemplate would go under this fund would have been
identified.”
Furthermore, Emefiele clarified that
previous intervention funds by the central bank had been effectively deployed
to critical sectors of the economy, just as he dismissed the insinuation that
the level of assessing the funds were low.
He said: “I will not say the level
of assessment is low. It is important for us to understand that in the process
of granting a loan, there has to be various forms of assessments to determine
the viability of the project and to determine whether that project can pay up.
So, we have the Commercial Agriculture Credit Scheme (CACS), the Power and
Aviation Intervention Fund (PAIF) and others and they have been fully
disbursed.
“The one that you may be talking
about is the micro, small and medium scale enterprises development fund
(MSMEDF), where we have about N220 billion under that scheme, but so far close
to N90 billion of the monies have been disbursed. But if you recall that these
are loans to MSMEs, I can assure you that so many small businesses and farmers
have accessed these funds.
But we are ramping up and we would continue as
usual to provide enlightenment for people to know they can access this scheme.
“That would also be the basis for
which the AGSME Fund would be launched. In the next couple of days, we would
release the guidelines for people to know how they can access this facility. But
it is important for us to know that we are going to build a strong governance
framework around the fund. The CBN would continue to provide intervention funds
at single digit interest rates as usual.”
According to the CBN governor, over
the next few days, the Bankers’ Committee would finalise the strategy,
governance, framework, action plan and assign responsibilities for the
implementation of its programme for 2017.
Source:Thisday
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