05 March 2015, Lagos – As part of efforts to unlock the potential of the real sector to engender output growth, value added productivity and job creation, the Central Bank of Nigeria (CBN) has established a N300 billion Real Sector Support Facility (RSSF).The facility shall be administered at an all-in INTEREST RATE/charge of nine per cent per annum payable on a quarterly basis. Specifically, the central bank shall be entitled to earn three per cent as interest and the banks, a six per cent spread.
The guidelines for the facility posted on the central bank’s website on Wednesday also stated that the fund would be used to support large enterprises for start-ups as well as expansion financing needs of N500 million up, to a maximum of N10 billion. The real sector activities targeted by the facility are manufacturing, agricultural value chain and selected service sub-sectors.
According to the CBN, the fund is to improve access to Nigerian SMEs to fast-track the development of the manufacturing, agricultural value chain and services sub-sectors of the Nigerian economy, increase output, generate employment, diversify the revenue base, increase foreign exchange earnings and provide inputs for the industrial sector on a sustainable basis.
The Development FINANCE Department shall be responsible for the day-to-day administration of the Facility.
Activities to be covered under the facility are new, start-ups and or expansion projects in manufacturing, for those involved in the production and processing of tangible goods, those that fabricate, deploys plants, machinery or equipment to deliver goods or provide infrastructure to facilitate economic activity in the real sector; and such 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 between 11 and 300,” it added.
The CBN document stated that financial institutions eligible to participate in the facility include all deposit money banks (DMBs) and development finance institutions (DFIs).
However, a borrower shall meet the following criteria to be eligible: “Any entity falling within the definition of an SME and/or manufacturer; an entity wholly-owned and managed Nigerian private limited company registered under the Companies and Allied Matters Act of 1990; a legal business operated as a sole proprietorship and is a member of the relevant Organised Private Sector Associations such as MAN, NASME, NACCIMA, NASSI e.t.c.”
It added: “Loan amount is minimum of N500 million up to a maximum of N10 billion for a single obligor. Any amount above N10 billion requires the special approval of management. Repayments under this facility shall be amortised. Loans shall have a maximum tenor of 15 years depending on the complexity of the project and shall terminate on 31st December, 2030. Each project tenor shall be determined in relation to its cash flow and life of the underlying collateral.”
*Obinna Chima – Thisday