From Uche Usim, Abuja
At the outset of the COVID-19 pandemic last year, the Central Bank of Nigeria (CBN) created a basket of intervention programmes to rescue the country that was just recovering from the pains of recession. Among the economic support initiatives is the Targeted Credit Facility (TCF), a pool of funds being disbursed to Nigerians to alleviate the plight of households and businesses impacted by the pestilence.
With an initial take-off of N150 billion, the apex bank, in March, doubled it to N300 billion to accommodate many more beneficiaries and boost consumer expenditure which should positively stimulate the economy.
As at March, N149.21 billion has been disbursed to 316,869 beneficiaries. Today, the figure has risen to 631,738 businesses and households across the country.
While the COVID-19-ocassioned lockdown cocooned many families and Micro Small and Medium Enterprises (MSMEs) at home, the TCF became a lifeline for them as the loans, with a five percent interest and a year moratorium, was accessed electronically.
With a twin blight of recession and COVID-19, the TCF has been described by experts as a well thought out intervention.
Beneficiaries of the facility, who spoke with Daily Sun hailed the apex bank for its numerous interventions. Albert Ifedi, a young graduate, told Daily Sun that she was a beneficiary of the CBN household loan under the Targeted Credit Facility (TCF) meant to cushion the effect of the COVID-19 pandemic.
“I saw the news in the media and I applied online. I was called for an interview and eventually, I was given. I got N400,000. It was indeed a dread come true because I’ve started a small food business in a makeshift place close to my house.
“I’m likely to pay back this loan in 18 months. I’m excited” she said.
Another beneficiary, Kathy Olamma, said he got a N350,000 TCF loan last month and used it to buy additional tools for his automobile repair business.
“I added money and bought a diagnostics machine for the latest model of cars. It’s scarce in Dutse. I can now diagnose vehicles and make money from it. If the owner wants, I’ll repair the vehicle after the diagnosis but diagnosing alone is N10,000. I am very happy”, he said.
For Isebor Mebele, the N190,000 she got from TCF came in handy to pay her rent.
“We were almost thrown out. My husband lost his job and rent became an issue. But the loan came and we’ve settled it. It’s N150,000. I’m a hairstylist and gradually, we’ll pay back the loan”.
The TCF and other intervention programmes resonate with It also resonates with Emefiele’s pledge of running a people-oriented CBN.
Also hailing the apex bank for its interventions, the Presidents of the Rice Farmers Association of Nigeria (RIFAN)- Alhaji Alhaji Aminu Goronyo; National Cotton Association of Nigeria (NACOTAN) – Mr. Anibe Achimugu; Maize Association of Nigeria (MAN); Maize Association of Nigeria (MAAN) – Alhaji Bello Abubakar; and the Maize Growers, Processors, and Marketers Association of Nigeria (MAGPMAN) – Dr. Edwin Uche attested to the success of the CBN ABP, which they noted had enhanced the value chains of their respective commodities.
Long before the COVID-19 pestilence, the Federal Government had rolled out several policies such as the National Information Technology Policy with the establishment of the National IT Development Trust Fund (NITDEF). The fund is intended to facilitate the provision of venture capital finance to the start-up of SMEs in the IT sector under the management of National Information Technology Development Agency (NITDA). In addition, the framework articulates strategies for empowering the labour force within the SME sector with necessary IT skills that will increase their productivity and facilitate exports through e-commerce.
Today, several SMEs that showcase their products on major internet platforms such as Facebook, Jumia and Instagram, have seen significant expansion of their respective businesses because of their ability to conduct business transactions online along with the presence of a robust payment system that enables instant payment for goods and services online.
The CBN Governor, Mr Godwin Emefiele, at a recent Finance forum, noted that with the abundant human resources in Nigeria, including a large population of over 200 million, natural resources and favourable climate among others, Emefiele notes that extensive measures must be put in place to accelerate the development of the economy and to make it more globally competitive. He maintains that special consideration should be given to the strengthening of physical and ICT infrastructure to enable SMEs to perform more efficiently and become globally competitive.
He also pushed for increased efforts towards accelerated diffusion of technology among SMEs and deepening reforms that improve human capital development through skills enhancement and proper linkage of research to industry will improve the performance of SMEs.
The above notwithstanding, in 2020, the world was hit by the COVID-19 pandemic and it threw vulnerable economies like Nigeria into unprecedented economic spasm. It led to an over 60 percent drop in the price of crude oil in the first half of 2020, along with a significant disruption in global supply chains and significant decline in government revenue, and our foreign exchange earnings.
In response to the impact of the virus on the economy, the monetary and fiscal authorities deployed unprecedented countercyclical measures aimed at containing the effects of the pandemic and driving the recovery of the economy. These targeted measures were aimed at supporting vulnerable segments of the society, as well as stimulating growth in key sectors of the economy such as agriculture, and manufacturing. As a result of these measures, the Nigerian economy exited the recession in the 4th quarter of 2020 and is currently on a path of gradual but sustained recovery.
At the 2021 convocation ceremony of the University of Lagos held recently, Emefiele, while presenting his paper; “National Development and Knowledge Economy in the Digital Age: Leapfrogging SMEs into the 21st Century”, noted that a vibrant and growing SMEs sector remains critical for achieving the goals of enabling greater growth of our economy and in creating jobs for the teeming youths.
According to Emefiele, the CBN has rolled out massive developmental interventions in some critical sectors of the Nigerian economy, especially in agriculture, manufacturing and SMEs.
“Attention has also been paid to advancing knowledge and innovation through various initiatives targeted at promoting youth’s entrepreneurship, research and development. Some of the specific achievements that we have recorded in this area are highlighted below.
“In terms of development finance interventions to directly support SMEs, the Bank has introduced several schemes and initiatives including the SME Credit Guarantee Scheme (SMECGS), Micro, Small and Medium Enterprises Development Fund (MSMEDF), Youth Entrepreneurship Development Programme (YEDP) and Agri-business/ Small and Medium Enterprises Investment Scheme (AGSMEIS). Others are the Entrepreneurship Development Centres (EDCs), National Collateral Registry (NCR), Creative Industry Financing Initiative (CIFI), Targeted Credit Facility (TCF) and the Nigeria Youth Investment Fund (NYIF)”.
He further revealed that one of the most recent schemes targeted at channelling low-interest wholesale funds to the MSME segment is the Small and Medium Enterprises Development Fund (MSMEDF). This scheme, which charges 9% interest rate, has recorded the disbursement of over N83.9billion to 216,704 beneficiaries at the end of 2020. The obligor limit ranges from N500,000 for micro enterprises to N50 billion for SMEs financed by DMBs/DFIs.
“Also, the initiative offers 10% of the total loans for start-up businesses, 2% to economically active persons living with disabilities (PLWD) and 60% of the Fund’s wholesale component dedicated to women entrepreneurs or women led MSMEs in order to promote financial inclusion.
“Another intervention is the Agri-business/SME Investment Scheme (AGSMEIS), an initiative of the Bankers’ Committee, in collaboration with the CBN was also set up to improve access to affordable and sustainable finance by agri-businesses and MSMEs. This will enhance the creation of productive employment opportunities and boost the managerial capacity of agri-businesses and MSMEs. So far, a total of N111.7 billion has been disbursed to 29,026 beneficiaries.
“Furthermore, a N50billion Targeted Credit Facility was introduced in March 2020 as a stimulus package to cushion the effects of COVID-19 pandemic on households and MSMEs across the country. So far, under AGSMEIS and our targeted credit facility, over N111.7billion and N253.4billion have been disbursed to 29,026 and 548,345 beneficiaries, respectively.
“The Central Bank also launched several youth investment-friendly programmes and interventions to empower Nigerian youths with necessary inputs to build successful SMEs and other businesses. One of such schemes is the Youth Entrepreneurship Development Programme (YEDP) which was launched in 2016 to enhance the deployment of the ingenuity and resourcefulness of Nigerian youths to achieve maximum economic development.