In a bid to unlock the tight credit market in Nigeria, enhance credit to the real sector, and complement its 500 billion Naira Power/Manufacturing facility; the Management of the Central Bank of Nigeria (CBN) has approved the establishment of a N200 billion Small and Medium Enterprises Credit Guarantee Scheme (SMECGS), to promoting access to credit by manufacturers and SMEs in Nigeria. The Scheme will be funded 100% and managed by the CBN. 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 industrialization of the Nigerian economy; increase the access to credit by promoters of SMEs and manufacturers; and generate employment.
Activities to be covered Under the Scheme
The activities to be covered under the Scheme are
- Manufacturing; Agricultural Value Chain;
- Small and Medium Scale Enterprises (SMEs) with assets not exceeding N300 million and labor force of 11 to 300 persons;
- 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
Trading activities are not covered by the scheme
Limits of Guarantee
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, etc.
The guarantee cover shall be 80% and shall be valid up to the maturity date of the loan with a maximum tenure of 5 years.
Eligibility Criteria for Participation in the Scheme
- All Deposit Money Banks and Development Banks shall be eligible to participate in the Scheme.
- Banks are however expected to conduct due diligence on any applications received and ensure that adequate collateral are taken to secure the facilities taken by promoters.
- SME promoters and Manufacturers must belong to any of the private sector associations like Nigerian Association of Small and Medium Scale Enterprises, Manufacturers Association of Nigeria, National Association of Small Scale Industries, etc.
The lending rate under this 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.
Head, Corporate Communications
16th April, 2010