The Central Bank of Nigeria (CBN), together with Nigerian polytechnics and universities have launched the Tertiary Institutions Entrepreneurship Scheme (TIES) to harness the potential of graduate entrepreneurs (gradpreneurs) in the country.The greatest beneficiaries of the funding scheme would be startups founded by graduates and undergraduates of Nigerian universities. Essentially, the Scheme seeks to provide an innovative financing mechanism that will assist economic growth and development while also creating jobs and enhancing the entrepreneurial ecosystem.
“Other specific objectives of the Scheme include: Provide an enabling environment for co-creation, mentorship and development of entrepreneurial and technological innovations; Classified as Confidential ii. Fast track ideation, creation and acceleration of a culture of innovationdriven entrepreneurship skills among graduates of polytechnics and universities in Nigeria,” CBN notes in a statement.
Which Businesses Are Eligible For The Funding?
Under CBN’s guidelines, businesses qualified to receive the funding include startups and existing businesses owned by graduates of Nigerian polytechnics and universities. The businesses must operate in the following areas:
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- Agribusiness — production, processing, storage and logistics;
- Information technology — application/software development, business process outsourcing, robotics, data management;
- Creative industry — entertainment, artwork, publishing, culinary/event management, fashion, photography, beauty/cosmetics; iv. Science and technology — medical innovation, robotics, ticketing systems, traffic systems, renewable energy, waste management; and
- Any other activity as may be determined by the CBN from time to time.
CBN intends to fund about 25,000 innovative startups and businesses under the arrangement yearly. Using that number, the projects to be funded by the CBN from different sectors under scheme, according to the latest guidelines are: Agri-entrepreneurs: 10,000; creative entrepreneurs: 5,000; tech entrepreneurs: 5,000; others: 5,000.
CBN also notes that focus shall be on both new (40% of projects to be financed) and existing businesses (60% of the projects to be financed).
Which Businesses Are Not Eligible For Funding?
- According to the CBN, trading activities shall not be eligible for financing under the scheme.
- Also, the businesses must not be ones run by graduates of more than 7 years post-NYSC.
- All tech or non-tech businesses/models recently banned by the Central Bank of Nigeria from operations are also not eligible.
What Type Of Funding Can Be Obtained Under The Scheme?
Under the scheme, two types of funding may be directly obtained by an entrepreneur under the scheme. They are:
- Loan
- Equity funding (that is, in exchange for shares in your company)
How Can You Obtain The Loan?
Loans may be obtained under the scheme according to the table below:
| S/No. | Classification | Dynamics | Documentation Requirements | Collateral Requirements | Repayment |
|---|---|---|---|---|---|
| 1 | Tier 1 – Individual projects | Loan Limit: N5 million Duration: 5 years Interest Rate: 5% per annum (9% effective from March 1, 2022 or as may be prescribed by the CBN) Moratorium: Maximum of 12 months on principal and interest | 1) The applicant shall apply as a business entity registered with the Corporate Affairs Commission (CAC) and certified true copies (CTC) of relevant forms submitted; 2) Bank Verification Number (BVN); 3) First degree certificate (BSc/HND or its equivalent); 4) National Youth Service Certificate (NYSC) discharge or exemption certificate; and 5) Certificate of Participation issued by polytechnics and universities evidencing entrepreneurship training. | 1) Duly signed Global Standing Instruction (GSI); 2) Third party guarantee from a senior federal/state civil or public servant (not below level 10 and not having less than 5 years to retire from service), clergy of note and reputation or recognized traditional ruler. | The borrower must make interest and principal payments on a monthly or quarterly basis, based on the defined cash flow cycle and the agreed repayment schedule. |
| 2 | Tier 2 – Partnership / Company projects | Loan Limit: N25 million Duration: 5 years Interest Rate: 5% per annum (9% effective from March 1, 2022 or as may be prescribed by the CBN) Moratorium: Maximum of 12 months on principal and interest | 1) The partnership or company shall apply as a registered business with the Corporate Affairs Commission (CAC) and certified true copies (CTC) of relevant forms submitted. 2) Each member of the partnership or company shall also submit: ▪ Bank Verification Number (BVN); ▪ First degree certificate (BSc/HND or its equivalent); ▪ National Youth Service Certificate (NYSC) discharge or exemption certificate; and ▪ Certificate of Participation issued by polytechnics and universities evidencing entrepreneurship training | 1) Duly signed Global Standing Instruction (GSI) by member of the partnership or company; and 2) Third party guarantee from a senior federal/state civil or public servant (not below level 10 and not having less than 5 years to retire from service), clergy of note and reputation or recognized traditional ruler. | The borrower must make interest and principal payments on a monthly or quarterly basis, based on the defined cash flow cycle and the agreed repayment schedule. |
How Can You Obtain The Equity?
- Equity funding under the scheme will be implemented under the AgSMEIS Equity window, with application for participation submitted on https://cbnties.com.ng.
- Nigeria’s Bankers’ Committee Trust will hold the equity on behalf of the Nigerian government.
- The equity investments must be made in businesses that operate in the designated focal areas.
- The investment limit will be capped at the amount set forth in the AgSMEIS Guidelines.
- The investment will be made for a maximum of ten (10) years (until December 31, 2031).
- There would be a three-year lock-in period before exit in order to encourage value creation and boost managerial capacity of businesses.
How Can Interested Startups Go About Accessing The Funding?
First Check That Your Documents Are In Order
Anybody interested in applying for the funding must be graduates of Nigerian polytechnics and universities and must present the following documents:
- First degree certificate (BSc/HND/ or its equivalent);
- National Youth Service Certificate (NYSC) discharge or exemption certificate;
- Certificate of Participation issued by polytechnics and universities evidencing entrepreneurship training;
- Letter confirming the applicants’ deposit of required certificates from Participating Financial Institutions (Commercial banks, etc.). You may obtain this letter by contacting any participating financial institutions or banks listed on the application portal.
- Projected Statement of Income, Statement of Affairs, and cash flow, if the business has been less than 3 years in operations.
- Business plan outlining details, financials and economic benefits of the projects.
Submit Your Applications
- Once the documents have been confirmed to be in order, proceed to submit your applications through this online portal (https://cbnties.com.ng). Note however that CBN requires that original copies of certificates and documents must be presented for verification.
- Once your applications have been submitted, they would be transmitted directly to the participating financial institutions for evaluation and documentation with the CBN.
- Once the CBN approves your applications, the banks or other financial institutions will disburse the released funds into your accounts within five (5) working days with no restriction.
- However, it must be noted that the funds will only be disbursed in tranches and subject to approved terms and milestones. Hence, if the applicant defaults on the first tranche, it may be difficult to access the remaining tranches.
- Finally, once the funds have been disbursed, maintain accurate and up-to-date records that the CBN and Monitoring Team can check and verify.
How Do Startups Provide Global Standing Instruction Under Loan Collateral Requirement?
Global Standing Instructions are provided by the participating banks on behalf of the applicants. However, the documents where provided must be signed by the applicants/borrowers.
Is The Funding Good For You, And Have Previous Schemes Run By The CBN Worked?
Whether or not the funding is good for your business depends on the ease of the application process as well as the capacity of your business to repay the loan amount as and when due. Nigerian startups, such as Decagon, have gone ahead to access previous facilities rolled out by the Central Bank of Nigeria.
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Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer