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Wednesday, March 25, 2020 /10:53
AM / By CBN / Header Image Credit: EcoGraphics
Further to the CBN
Governor's Press Release of March 16, 2020 and our circular referenced
FPR/DIR/GEN/CIR/07/049 in response to COVID-19 outbreak and spillovers, the CBN
hereby issues the following attached Guidelines for the.
Related Link: CBN
Policy Measures In Response to COVID-19 Outbreak and Spillovers
Implementation of the $50 billion Targeted Credit Facility for households and small and medium sized enterprises (SMEs) that have been particularly hard hit by COVID-19.
Enquiries on the Guidelines may be referred to the
Director, Development Finance Department, Central Bank of Nigeria, Abuja.
Guidelines For The Implementation Of The N50 Billion Targeted Credit Facility
1.0 Introduction
The
corona virus (COVID-19) pandemic has led to unprecedented disruptions to global
supply chains, sharp drop in global crude oil prices, turmoil in global stock
and financial markets, massive cancellation of sporting and entertainment
event, lockdown of large swaths movements of persons in many countries, and
intercontinental travel bans/restrictions across critical air routes across the
world. These outcomes have had severe consequences on households' livelihoods
and business activities, resulting from drop in global demand, declined
consumer confidence and slowdown in production.
In this
respect, the Central Bank of Nigeria (CBN) introduced the N50 billion Targeted
Credit Facility (TCF) as a stimulus package to support households and micro,
small and medium enterprises (MSMEs) affected by the COVID-19 pandemic.
This Guidelines outlines the operational modalities for the Scheme.
2.0 Objectives of the Facility
The broad objectives of the CBN's N50 billion Targeted Credit Facility include:
i. Cushion the adverse effects of COVID-19 on households and MSMEs;
ii. Support households and MSMEs whose economic activities have been significantly disrupted by the COVID-19 pandemic.
iii. Stimulate credit to MSMEs to expand their productive capacity through equipment upgrade, and research and development.
3.0 Eligible Participants
i.
Households with verifiable evidence of livelihood adversely impacted by
COVID-19; and
ii.
Existing enterprises with verifiable evidence of business activities adversely
affected as a result of the COVID-19 pandemic.
iii. Enterprises with bankable plans to take advantage of opportunities arising from the COVID-19 pandemic.
4.0 Activities Covered
Eligible activities under the Scheme include:
i. Agricultural value chain activities
ii. Hospitality (accommodation and food services)
iii. Health (pharmaceuticals and medical supplies)
iv. Airline service providers
v. Manufacturing/value addition
vi. Trading
vii. Any other income generating activities as may be prescribed by the CBN.
5.0
Funding
The
Scheme shall be financed from the Micro, Small and Medium Enterprises
Development Fund (MSMEDF).
6.0 Participating Financial Institution
The
eligible participating financial institution for the Scheme is NIRSAL
Microfinance Bank (NMFB).
7.0 Loan Limit
7.1
SMEs: The loan amount shall be determined based on the activity, cashflow and
industry/segment size of beneficiary, subject to a maximum of N25 million for
SMEs; and
7.2
Households: Can access a maximum of N3 million
7.3
Working capital shall be a maximum of 25% of the average of the previous 3
years' annual turnover. (where the enterprise is not up to 3 years in
operation, 25% of the previous year's turnover will suffice).
8.0 Interest Rate
Interest
rate under the intervention shall be 5% p.a. (all inclusive) up to 28th
February 2021 and thereafter, the interest on the facility shall revert to 9%
p.a. (all inclusive) as from 1st March 2021.
9.0 Loan Tenor
9.1 Working
capital shall be for a maximum period of one year, with no option for rollover.
9.2
Term loan
shall have a maximum tenor of not more than 3 years with, at least, one-year
moratorium.
10.0 Collateral Requirement
The
collateral to be pledged by beneficiaries under the programme shall be as may
be acceptable by NIRSAL MFB, but may include any one or more of the following:
i. Moveable asset(s) duly registered on the National Collateral Registry (NCR).
ii. Simple deposit of title documents, in perfectible state
iii. Deed of Debenture (for stocks), in perfectible state
iv. Irrevocable domiciliation of proceeds
v. Two (2) acceptable Guarantor
vi. Personal Guarantee of the promoter of the business
vii. Life Insurance of the Key-Man, with NMFB noted as the First Loss Payee
viii. Comprehensive Insurance over the asset
11.0 Principal Repayment
Repayment
shall be made on installment basis by the beneficiaries to the NMFB according
to the nature of enterprise and the repayment schedule/work plan provided at
the application stage
12.0 Modalities
12.1 Households/MSMEs
i. Eligible households or MSMEs shall submit applications directly to NIRSAL Microfinance Bank (NMFB);
ii. The application must, among others, contain BVN number, business registration (where applicable) and business plan with clear evidence of the opportunity or adverse impact as a result of COVID-19 pandemic.
iii. NMFB shall appraise and conduct due diligence applications.
iv. Upon satisfactory appraisal of application, NMFB shall forward the applications to the CBN for final approval
v. CBN reviews applications and gives final approval for disbursement to NMFB.
12.2 Corporate Entity
i. A corporate entity shall submit application to NMFB with clear evidence of the opportunity or adverse impact as a result of COVID-19 pandemic.
ii. NMFB shall appraise and conduct due diligence applications.
iii. Upon satisfactory appraisal of application, NMFB shall forward the applications to the CBN for final approval
iv. CBN
reviews applications and gives final approval for disbursement to NMFB.
13.0 Monitoring and Reporting
Periodic
monitoring of projects financed under the Scheme shall be conducted by the
NIRSAL MFB.
14.0 Responsibilities of Stakeholders
14.1
CBN shall:
i.
Provide the seed fund for the Scheme
ii.
Release funds to NIRSAL MFB for disbursement to successful applicants.
iii.
Review the Guidelines of the Facility as may be necessary i
v.
Receive and process periodic returns from NIRSAL MFB.
v.
Monitor and evaluate implementation of the Scheme by NIRSAL MFB.
14.2
NIRSAL MFB shall:
i.
Validate the status and BVN of the applicants;
ii.
Process and disburse funds to approved beneficiaries;
iii.
Maintain
records of all beneficiaries and disbursements;
iv. Forward periodic returns on the prescribed format on the Scheme to
CBN;
iv.
Comply with
the Guidelines; and
vi. Carry out any other duties as the CBN may prescribe from time to
time.
15. Exit Date
The
exit date of this Intervention is 31st December 2024.
16. Amendments
This
framework shall be subject to review from time to time as may be deemed
necessary by the CBN.
17. Enquiries and Returns
All
enquiries and returns should be addressed to:
Director,
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