Chido focuses on 12 CBN interventions Southeast businesses are missing and recommends ways to change the persistent negative outcones.
Have you heard of Mrs Yemisi Iranloye or Psaltery Nigeria Limited? The story of Yemisi Iranloye has trended since March 2021. It encapsulates the Commercial Agriculture Credit Scheme (CACS) of the Central Bank of Nigeria, one of 12 interventions in the development finance push of the Central Bank of Nigeria.
The sum of her story is that Central Bank Funding Grows Cassava Production.
Mrs Iranloye is CEO of Psaltery International that built a cassava glucose factory and supplies Nestle and Nigerian Breweries. Psaltery leverages cooperative principles for its agriculture operations. The support of the Central Bank of Nigeria was critical to that success.
Her testimony. “Funding was a major challenge. All I had was this land. I presented many business plans and proposals to convince the bank this was the way to go.
“Fortunately, we received funding from the Central Bank of Nigeria (CBN) called the Commercial Agriculture Credit Scheme (CACS) at a single-digit interest rate. We used these funds to construct the first factory”.
She continues: “The following year, we accessed more funding through the CBN’s Agricultural Credit Guarantee Scheme Fund (ACGSF). This fund provides loans to farmers for up to 75% of the value of their collateral. We saw it as an advantage, even though it required us to provide a 100% collateral guarantee for the farmers.
“Because we had trusted them, having lived and worked with them for about two years, we felt we could put down the collateral for about 100 farmers.
“Also, under that scheme, when farmers pay back, they get what we call drawbacks. We got the farmers to pay back 100%, and CBN returned about 40% of their interest. That encouraged them a lot, and they were able to expand their farms.”
Psaltery Limited operates in the South-West. The story at the other end is not as salutary.
Stakeholders of both parties must work in concert to change the narrative about the Central Bank of Nigeria and the South-East. In May 2021, the lender of last resort asserted that the South-East ranked lowest among regions accessing its development finance funds.
At a sensitisation fair in Enugu, CBN Director of Corporate Communication, Osita Nwanisobi, urged businesses in the South-East to look in the way of CBN interventions. “We are coming out so aggressively to talk to them because these interventions are real, and people have to be able to grow their businesses through these interventions as well as those in agriculture who have used it also to grow their commodities.
“These interventions are unique on their own and their requirements are different. All our interventions are real and working perfectly as the CBN Governor is passionate about these interventions so you can come over and take advantage of these intervention programmes without knowing anybody. However, Prof Gregory Ibe, founder of Gregory University, Uturu countered this claim.
Then it died out.
The first step in the journey towards a resolution is to fill any possible communication gaps. The Central Bank says it have 37 intervention programmes to assist businesses and grow the economy. At least 12 of these are listed on its website and should interest businesses in the South-East.
They include the following: Commercial Agriculture Credit Scheme, Real Sector Support Facility (RSSF), SME Credit Guarantee Scheme (SMECGS), SME Re-structuring and Refinancing Fund (SMERRF), and Nigeria Incentive-based Risk Sharing System for Agricultural Lending (NIRSAL).
There are also Power and Airline Intervention Fund (PAIF), Nigeria Electricity Market Stabilisation Fund (NEMSF), Anchor Borrowers Programme and Nigeria Textile Intervention Fund. The list also includes Non-oil Export Stimulation Facility, Youth Innovative Entrepreneurship Development Programme (YIEDP), and Export Credit Rediscounting and Refinancing Facility.
Changing the Narrative on CBN Southeast Interventions
The learning from the Psaltery case study includes having an ongoing project with adequate documentation and backing. Psaltery even deployed the cooperative model for its supply line to ensure it could meet obligations.
Collaterals remain a central part of the mix.
Documentation is critical.
Another consideration is having a good relationship with your bank. The Central Bank repeats this message for nearly all the programmes. “Prospective borrowers should approach Participating Financial Institutions (PFIs) of their choice and apply for the Fund”.
Know the appropriate PFI to approach. As they say in the street, Shoe get size. For the Micro, Small and Medium Enterprises Development Fund (MSMEDF), for instance, the Central Bank categorises borrowers and PFIs.
Micro entrepreneurs are borrowers seeking loans of less than N500, 000. They should approach microfinance banks, NGO/Microfinance institutions, financial cooperatives, and finance companies. This excludes the regular or deposit money banks such as your First Bank, Guaranty Trust or Access Bank.
Small and Medium Enterprises (SMES) is the classification for businesses seeking loans of between N500, 000 and N50million. They should apply through the regular or deposit money banks, the Bank of Industry, and the Bank of Agriculture.
Chambers of Commerce, trade and professional associations, market unions, and cooperatives should pay closer attention to the CBN intervention funds. The South-East should grab every form of assistance to support growth in the region. Pursue this opening with the accustomed determination of our people. Shed light on any dark areas by sharing your experiences so we can reach the folks at the Central Bank for illumination and answers.
The narrative of the South-East as laggards is not familiar and is unacceptable. We must all work to change it.
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