ABUJA: CBN Reviews N220bn MSME Fund Guidelines to Encourage Start-ups

Source:THISDAYLIVE

As part of efforts to encourage entrepreneurial ventures and new businesses in the country, the Central Bank of Nigeria (CBN) has reviewed the guidelines for its N220 billion micro, small, and medium scale enterprises development fund (MSMEDF).

Part of the 23-page new revised guidelines that was posted on the central bank's website yesterday stated that incentives would be given to start-ups that apply for the fund. It also stated that participating financial institutions (PFIs) are expected to accept charges on fixed and floating assets of the financed projects as collateral for start-ups.

Previously, only existing businesses could borrow from the fund through their banks.

The banking sector regulator also stated that collateral requirement from start-ups by PFIs  shall be educational certificates such as SSCE, National Diploma (ND), National Certificate of Education (NCE), National Business and Technical Examination Board (NABTEB), Higher National Diploma (HND), University degree (NYSC Certificate where applicable) and a guarantor. The start-ups to access the MSMEDF must present their Bank Verification Number (BVN).

According to the central bank, Venture Capital Firms (VCFs) that wish to finance start-ups in form of equity participation shall be eligible to access the MSMEDF at two per cent for investment in start-up projects. The collateral for such facility to the VCF shall be bank guarantee.

The CBN also said that banks and other finance institutions that lend to business start-ups under the fund will be allowed to access the fund at zero interest rate.

In addition, the CBN also reduced interest rate it charges PFIs accessing the loan from three per cent percent to two per cent.
“All PFIs shall access funds at an interest rate of two per cent per annum and on lend at nine per cent per annum inclusive of all charges. The interest rate chargeable under the MSMEDF may be reviewed by the Central Bank of Nigeria from time to time,” it added.

The CBN Governor, Mr. Godwin Ifeanyi Emefiele, had at the recently concluded Bankers' Committee retrearedid losed that the central bank would soon introduce measures to generate one million graduate employments. 

“In 2016, the CBN is contemplating a programme that would support SMEs at concessionary pricing to our young graduates.  We need to get more people to be employed. The central bank would over the next few weeks work out the initiative to create employment for at least one million graduates in Nigeria in 2016. That would entail the support from Nigerian banks and our development partners," the governor also said.