CENTRAL BANK OF NIGERIA GUIDELINES FOR THE IMPLEMENTATION OF THE N50 BILLION TARGETED CREDIT FACILITY

1.0 Introduction

The coronavirus (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 a drop in global demand, declined a 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 guideline 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.

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 the 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

The interest rate under the intervention shall be 5% p.a. (all-inclusive) up to 28th February 2021 and thereafter, the interest in 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.

8.0 Collateral Requirement:

The collateral to be pledged by beneficiaries under the program 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 the perfectible state.

iii. Deed of Debenture (for stocks), in the 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

9.0 Principal Repayment;

Repayment shall be made on an 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.

10.0 Modalities

10.1 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 the 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.

10.2 Corporate Entity:

i. A corporate entity shall submit an application to NMFB with clear evidence of the opportunity or adverse impact as a result of the 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.

11.0 Monitoring and Reporting

Periodic monitoring of projects financed under the Scheme shall be conducted by the NIRSAL MFB.

12.0 Responsibilities of Stakeholders

12.1 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.

iv. Receive and process periodic returns from NIRSAL MFB.

v. Monitor and evaluate the implementation of the Scheme by NIRSAL MFB.

12.2 NIRSAL MFB shall:

i. Validate the status and BVN of the applicants;