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Date For Nigerian Businesses To Secure More Loan From Banks Further Shifted To January, 2020.

October 3, 2019

For businesses desiring to raise funds from banks in Nigeria, beginning from January 1, 2020 may be the best time to do so as more banks may be rushing after them. Recall that the Central Bank of Nigeria recently made it mandatory for money deposit banks in Nigeria to maintain loan to deposit ratio of 60% effective September 30, 2019. A new review has been made on that by Nigeria’s central bank.

In its most recent directive to banks and other money deposit banks in Nigeria, the apex bank (CBN) has further raised the Loan to Deposit Ratio of banks from 60 to 65 percent.

Here Is All You Need To Know

The CBN gave the directive in a letter signed by the Director of Banking and Supervision, Bello Hassan, to all banks on “Regulatory measures to improve lending to the real sector of the Nigerian economy.”
The CBN indicated that the credit level in the sector grew by N829.4bn or 5.33 percent at the end of May from N15.56tn to N16.39tn as of September 26.

The circular read:

“The Central Bank of Nigeria has noted the appreciable growth in the level of the industry growth credit, which increased by N829.4bn or 5.33 per cent from N15.56tn at end of May 2019 to N16.39tn as at September 26, 2019 following its pronouncement on the above initiative.

“In order to sustain the momentum and in line with the provisions of our earlier letters, the minimum Loan to Deposit Ratio target for all Deposit Money Banks is hereby reviewed upwards from 60 per cent to 65 per cent. “Consequently, all DMBs are required to attain a minimum LDR of 65 per cent by December 31, 2019 and this ratio shall be subject to quarterly review. To encourage Small and Medium Enterprises, retail mortgage and consumer lending, these sectors shall be assigned a weight of 150 per cent in computing the LDR for this purpose,” it said. The CBN said “failure to meet the above minimum LDR by the specified date shall result in a levy of additional Cash Reserve Requirement equal to 50 per cent of the lending shortfall implied by the target LDR”

This is The First Time The Central Bank of Nigeria Is Weighing In On Minimum Lending Ratio

Previously, there Nigeria had no rule on minimum loan-to-deposit ratios. However, many Nigerian lenders have pegged ratios of about 40%.

However, Nigerian banks are so reluctant with lending to businesses and have resisted lending to businesses and consumers and instead piled their cash into naira bonds, which yield 14.3% on average, one of the highest rates globally.

Lenders worry that with inflation at more than 11%, extending more credit could endanger the financial system through an increase in non-performing loans, or NPLs.

That makes some analysts skeptical of whether the new measures will work.

“Forcing banks to lend under the current macro-economic situation will only result in a buildup in Non-performing loans,” analysts at Lagos-based CSL Research, including Gloria Fadipe, said in a note to clients.

“This could pose a risk to financial stability.”

CSL estimates it could result in an additional 1.4 trillion naira ($3.9 billion) of lending if the central bank gets its way.

Bad Loans

Non-performing loans as a percentage of total credit in the Nigerian banking industry declined to 11% in the first quarter from 14% a year ago, according to the National Bureau of Statistics.
Past experience with such measures isn’t encouraging. The central bank last year allowed banks to use their statutory cash reserves to fund manufacturers on the condition that such loans were at a maximum interest rate of 9% and a minimum maturity of seven years. The lenders didn’t take advantage of the policy due to credit risk and high returns on government bonds, according to Michael Famoroti, an economist and partner at Stears Business.

The Implication of This To Businesses

With this move, it is expected that Nigerian money deposit banks are going to loosen up money to Nigerians. For businesses desiring to raise funds, from January 1, 2020 may be the best time to laugh as more banks would be rushing after them. However, it remains whether Nigeria’s commercial banks would not fight back, by either setting up SPVs or lending to more stable corporations, in which case the vision of the CBN may have been defeated.

In any case, businesses should, once again, dust up their loan procurement files and get set for January 1, 2020.

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world

Nigeria Is Going Cashless With New CBN Policy. Here Is What Nigerian Businesses Need To Know

September 18, 2019

Nigeria is set to displace all physical transactions involving cash. The country’s central bank has issued a new policy that is targeted at phasing out all transactions involving the movement of cash within the country. In simple language, the Central Bank of Nigeria is telling all businesses who rely on the country’s banking system to go digital or be fined for not doing so. This event is happening despite the fact that more than 4 % of the world’s financially excluded live in Nigeria.

Nigeria in the context of lower middle income countries — Source: World Bank’s Global Findex Database

Here Is All You Need To Know

From September 18 2019, withdrawals and deposits of physical cash in Nigeria will now attract processing fees payable by individuals or corporate owners of bank accounts involved where the transactions were carried out in Nigeria’s commercial capital Lagos; the Northern state of Kano; and the Southern states of Rivers, Ogun, Anambra and Abia; including Nigeria’s capital city Abuja.
It will however become effective in all states of Nigeria on March 31, 2020.
Nigeria’s central bank said the measure was put in place to encourage its cashless policy .
Cash withdrawal by an individual from N500, 000 and above will attract 3% of the amount withdrawn while cash deposit of N500, 000 and above will attract 2% of the amount to be deposited.
5% processing fee will be levied on cash withdrawals from N3 million and above from a corporate account while cash deposits attract 3% processing fee.
The charges are an addition to the already existing ones, the CBN’s Director of Payments System Management Department Sam Okojere, said in a memo to deposit banks on Tuesday.

Account Type	Withdrawal/Lodgment Limits	Processing Fees for Withdrawals	Processing fees for lodgements
Individual	Above N500,000	3% (N15,000)$42	2% (N10,000) $28
Corporate	Above N3,000,000	5% (N150,000) $417	3% (N90,000) $250

The Implication of This

Government Struggling to Shore Up A Struggling Economy?

The imposition of extra charges by the CBN may not be unconnected to the President Muhammadu Buhari’s government struggles to boost non-oil revenue since oil sales make up 90% of foreign-exchange receipts.

Poor Financial Inclusion Rate

The new policy is expected to be a major set back on CBN’s continued hype on financial inclusion. Many Nigerians, for numerous reasons are currently unbanked and lack access to formal financial services. The results of the EFInA Access to Financial Services in Nigeria 2012 survey, for instance, showed that 34.9 million adults representing 39.7% of the adult population were financially excluded. Only 28.6 million adults were banked, representing 32.5% of the adult population. Billions of Naira circulate through the informal sector and this has a negative impact on the country’s economic growth and development. The EFInA Access to Financial Services in Nigeria 2012 survey revealed that 23.0 million adults save at home. If 50.0% of these people were to save N1,000 per month with a bank, then up to N138 billion could be incorporated into the formal financial sector every year. With this new policy, expect financial inclusion rate in Nigeria to dive further low. The immediate impact of this is that in the absence of finance, people who are not connected with the formal financial system lack opportunities to maximise their income and expand their businesses. Again, vast unutilized resources, in the form of money in the hands of people who are in the informal sector could limit a country’s economic growth potential.

Source: World Bank’s Global Findex Database

New Digital Tax

Again once the old VAT Act is amended, and the new VAT rate becomes effective, the new rate will automatically be applicable to online transactions carried out in Nigeria. Nigeria ’s Federal Inland Revenue Service, the national tax agency has recently announced that digital tax will become effective January, 2020. This is expected to discourage online transactions and shrink the purchasing powers of Nigerians in a country where the gdp per capita is still less than $2000 ( one of the lowest in the world) and over 86.9, representing 50% of the population are still living below the global poverty line (the worst in the world).

Poor Internet Penetration Rate

The Global State of Digital in 2019 report discovered that there are 98.39 million internet users in the country. Compared to January 2018, there has been a 4 million increase in the number of internet users. Despite this increase, overall internet penetration remains quite low, with only 50% of the population connected to the internet, compared to the global average of 57%. Unlike Nigeria, Kenya has a really high level of internet penetration (84%), South Africa 54%, and Ghana 35%. Of the 98.39 million Nigerian internet users, 54% access the internet on a daily basis. The new policy also brings to question the capacity of Nigeria’s banking sector and other digital services to effectively process payments, with less error and under good and steady power supply.

New Opportunities For Fintech Startups

With the new policy, expect increased activities for fintech startups in Nigeria who would be battling to capture the market share. This is therefore, a golden opportunity for startups in the financial services sector, although there is still a huge barrier of trust to overcome.

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world

Nigerian Banks And Loan Disbursement To Small And Medium Scale Businesses

August 2, 2019

This is a good time for Nigerian businesses to access loans. Nigeria’s Central Bank has recently mandated all money deposit banks in the country to give out 60% of all the money within their disposal as loans. Here is how some banks across Nigeria are starting to observing the directive.

Access Bank

Nigeria’s Access Bank, which has recently gone into a merger with Diamond Bank has recently announced plans to launch an innovative portal that will allow customers to process their loan application online. The bank granted up to N37 billion loans to its SMEs customers in 2018 alone.

The Bank has also organized a sensitization programme for players in the creative industry with a view to making access to the CBN Creative Sector Intervention Fund, CIFI, more seamless.

The Central Bank of Nigeria, CBN, recently rolled out the CIFI as part of its efforts to open up the creative sector and improve its contribution to the economy.

The CBN has already earmarked N20 billion for disbursement in the first phase of the exercise with three to 10 years payback plan and a maximum of nine percent interest rate per annum.

Fidelity Bank

Fidelity Bank has recently announced a partnership with PwC Nigeria, a tax and advisory services company, to fund SMEs with N12 million grant in its Fidelity Small and Medium Enterprises (SMEs) Funding Connect Series.
The bank also said that, at the final series of the event, three finalists will be rewarded a grand sum of N2 million (1st position) and N1 million each for the 2nd and 3rd positions respectively. The Executive Director Shared Services and Products, Mrs. Chijioke Ugochukwu, disclosed this at the Fidelity SME Forum on Inspiration FM, Lagos.
The event which will kick off in Lagos on August 7, 2019, is focused on funding.

“The event is focused on funding because in the course of our work, we have realised that aside capacity issues, funding is a major issue. So we try to create a platform where the supply and demand sides of the equation would meet. Supply meaning the fund providers while the demand side means the founders/entrepreneurs,’’ she said.

The entire series will be in Lagos, Port-Harcourt, later this year and in Kano early next year and we anticipate that across the three series we will have at least 3,000 participants, 10,000 SMEs, that will come in contact with 60 founders, 60 entrepreneurs and in total we are looking at N12 million in grants and across the entire series of the six breakout session in networking cocktails.
The three capacity building sessions will be with fund providers, founders, on one hand, model entrepreneurs, founders and subject matter experts.
“The five finalists get a chance to pitch the entire forum on August 7. So the five finalists will be live at the event and they will speak to the house about their ideas and three winners will emerge. The first prize will be N2 million and two consolation prizes of N1 million each.”
“To attend the event, you are to register by visiting the dedicated website for the bank which is smeconnect.fidelitybank.ng and of course also via the event app which you can download from Google Play stores for android phone users and the RS app store for Apple users.”

Nigerian banks’ lending pattern pointing to financial exclusion of SMEs

First Bank Of Nigeria

If you own micro, small or medium agricultural enterprise, this loan facility is a special intervention fund provided by the CBN to support your business. You get this loan at a low-interest cost and enjoy long-tenured repayment structure; to assist your business in enhancing capacity for employment generation, growth, and economic development.

Trusted customers of FirstBank seeking to expand their agri-businesses using low priced credit facilities as made possible under the scheme can benefit from this loan.

GTB

Fashion Industry Credit

Tailored to your Fashion business, designed for growth. In line with the CBN creative industry loan, the bank has created a single-digit interest rate loan at 9% to provide entrepreneurs in the fashion industry with all the financing they need to grow their business.

The loan can be:

Up to N5 Million for your fashion business.
Single-digit (9% per annum) interest rate at 0.75% per month
No fees
Flexible repayment plan spread over 360 days
Customers can access up to 50% of the average annual turnover

Food Industry

The bank also grants loan to the food industry. Now you can get all the financing you need with the GTBank Food Industry Credit, which offers you a single-digit interest rate loan of just 9% per annum.

The loan can be:

Up to N2 Million
9% per annum interest rate (0.75% monthly)
Flexible repayment plan spread over 180 days
Zero Fees

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world.

Facebook: https://web.facebook.com/Afrikanheroes/

MTN gets mobile money licence in Nigeria

July 30, 2019

Group to benefit from efforts to give millions of Nigerians without bank accounts access to financial services.

A subsidiary of MTN Nigeria has been awarded a license by the country’s central bank that would allow it to provide financial services, the telecoms firm said on Monday.

Nigeria announced last year that it would allow telecom companies to provide banking services, aiming to give millions of Nigerians without bank accounts access to mobile money services, a policy that has been successful in Kenya.

SA’s MTN Group, which owns a majority stake in MTN Nigeria, said at the time it would apply for a mobile banking license in Nigeria and planned to launch the service in 2019. Since then, MTN Nigeria listed in Lagos in May in a 2-trillion naira ($5.6bn) debut, which turned it into the exchange’s second-largest stock by market value.

MTN Nigeria’s CEO, Ferdi Moolman, said on Monday its Yello Digital Financial Services (YDFS) unit had been granted a “full super-agent” license by the Central Bank of Nigeria.

“Through the network established by YDFS, MTN is in a position to broaden the availability of financial services for the underserved across the country. This marks a very important first step in leveraging our infrastructure to scale our fintech initiatives,” said Moolman.

“We have also applied for a payment service bank license, which will enable us in time to offer a broader and deeper range of financial services to those communities and we remain hopeful we will receive approval shortly,” he said. He did not give specifics.

MTN runs Nigeria’s biggest mobile phone network serving about 56-million people.

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry.

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Banks No Longer Need Separate License for Wallet Service – CBN

July 17, 2019

The Central Bank of Nigeria (CBN) has disclosed that Deposit Money Banks (DMBs) will no longer require a separate license to operate a mobile wallet or mobile banking.

This was disclosed in Lagos by the director, Banking and Payment System, CBN, Sam Okojire, who was represented by the deputy director, Banking and Payment System, Mr. Musa Itopa Jimoh, at the First Bank cross border seminar for Banking and Telecom Regulators from sub-Saharan Africa.

Jimoh said: “You do not need authorization from the CBN to go into Wallet services or mobile money schemes. All you need is to notify the CBN your current license suffix.”

Speaking of the apex bank’s position on the adoption of digital currencies, he said: “We have not made up our mind on what steps to take but I am not sure or believe that the CBN will ever go crypto.

“We know what they are doing in Sweden and China. We are not running on the same parameter and so based on financial inclusion, adopting digital currency will mean a number of our population will be excluded.”

In his opening remarks, the Managing Director/CEO of First Bank of Nigeria Limited Adesola Adedutan, said as the global market continues to grapple with digital technology, the bank will be at the forefront.

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry.

Facebook: https://web.facebook.com/Afrikanheroes/

Nigerian Banks Fret Over New Directives on Loans

July 15, 2019

A new directive by the Central Bank of Nigeria (CBN) ordering banks to have a minimum loan to deposit ratio of 60% by the end of September 2019. The directive according to the Apex bank is intended to get the commercial banks to lend more to the real economy and buy fewer government securities.

Observers, however, differ on the impact of this directive with some expressing worries over the timing which they say could have a negative impact on asset quality.

Others are of the view that the move “may unintentionally result in a reduction of banks’ risk management criteria for loan extension and by extension a deterioration in asset quality. With a few calling for new policies designed to increase bank lending to follow.

Loan ratios at Nigerian banks shrank between 2016 and 2018 as slower economic growth and high yields on government securities prompted banks to load up on lower-risk assets.

The new move encourages lending to small and medium-sized businesses (SMEs), mortgages and consumer loans by overweighting these loans at 150%.

That aims to encourage banks to accept the risk of an increase in non-performing loans (NPLs). Consumer lending in Nigeria is hampered by lack of reliable household credit records and weak recovery enforcement, Moody’s says in a note on July 8.

Midsize banks with higher exposure to consumer and SME loans tend to have higher NPL ratios than large banks, according to Moody’s.

Banks that fail to meet the new threshold will have to pay half of the shortfall as an additional cash reserve requirement. Moody’s argues that banks will be forced to diversify their lending, so reducing concentration risk, and says that most have already complied.

On the banks most affected by this development, our findings show that Zenith Bank, United Bank for Africa (UBA), Guaranty Trust Bank (GTB) and Stanbic are most affected as they have loan ratios lower than the threshold.

Ignoring the central bank’s weighting concession for lending to preferred sectors, Abimbola calculates that Zenith and UBA will both have to increase their loan books by over 350bn naira (870m euros, $970m) by September 30.

GTB and Stanbic will have to add 165bn naira and 30bn naira of new loans respectively, he says. That implies absolute quarter-on-quarter loan growth of 20% for Zenith. From experience, it is unusual for banks to increase their loan books by more than 10% in the whole year.

This could see downside risk on NPLs in the short term, which may prompt markets to start to pricing in negative headlines from the banks. Charles Robertson, a global chief economist at Renaissance Capital, says that a market-friendly option would be for the government to close its budget deficit.

This would force banks to lend to someone other than the government, he says. In the longer term, lower inflation would cut interest rates and encourage lending and borrowing, he argues.

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry.

Facebook: https://web.facebook.com/Afrikanheroes/

Using Movable Assets To Secure Loans In Nigeria. What Startups Need To Know

July 11, 2019

Startups in Nigeria who do not have landed property but movable assets as securities for loans now have an alternative. Following the passage of Secured Transactions in Movable Assets Act into law, owners of small businesses can now borrow from banks and other financial institutions, even though they do not have any lands or buildings. All they need to do is to first register the movable assets such as cars, or any property of worth (which property is not land or building or fixed property) with the National Collateral Registry.

This Is How It Works Under The Secured Transactions in Movable Assets Act

This law allows small, medium business owners or startups to create security interests in respect of both their present and future movable assets.
Movable collateral under the Collateral Registry Regulation includes equipment, inventory, accounts receivable, household items, bank accounts, farm products, motor vehicles, boats, planes, consumer goods, trees that have been severed and oil, gas or minerals that have been extracted, etc.
You can register your interest over such assets as you do when you want to perfect titles to land at the Land Registry.
In this case, all that is required is that you take steps to perfect the interests in that asset.
The law has created a National Collateral Registry where you can now perfect the assets.
An asset is deemed perfected when a financial statement in respect of such a security interest has been registered with the National Collateral Registry.
The registered financial statement is valid until the expiration of the terms specified in the financial statement.
The creditor who registers the Financial Statement is issued with a confirmation statement by the registrar.
Where two security interests have been perfected in respect of the same asset, the first to be registered would rank first.
Using the confirmation statement and other documents, you may then apply for loans at a bank in Nigeria under the National Collateral Registry Scheme or the Secured Transactions in Movable Assets Act

Why This Is So Different From Normal Collateral Requirements From Banks

Previously, before the passage of the Secured Transactions in Movable Assets Act, small and medium scale businesses in Nigeria were often required to present their landed property or buildings (which they hardly had) in order to procure a loan.

Now, persons who have movable assets in Nigeria such as equipment, inventory, accounts receivable, household items, bank accounts, farm products, motor vehicles, boats, planes, consumer goods, trees that have been severed and oil, gas or minerals that have been extracted can now borrow loans from banks without landed property being demanded as collateral. All they need to do is to register the asset with the National Collateral Registry in order to create security interests over the assets.

Registration will remain in the Collateral Registry until the expiration of the term indicated in the financing statement, or until the registration is canceled (discharged). The period of registration does not, however, need to be the same as the duration of the loan, as there may be an expectation between the debtor and secured creditor that the loan will be renewed. Six months after the expiration of a registration, it shall cease to be publicly searchable and will be moved to an archive, from which it can be retrieved only by the Collateral Registry staff.

Where the debtor fails to pay back the loan, the secured creditor has a right to enforce its security interest in the collateral.

Key Things To Have In Mind About The Secured Movable Assets In Question

With this law, individuals in Nigeria may apply for a loan as a group. They may use their assets that they own individually or jointly as collateral for the loan.
Using immovable property, such as land or building carries certain unwanted risks for the debtor. It is therefore reasonable that a debtor will be more comfortable with losing equipment or other movable property than with losing a house in case of a default.
Currently, it costs N1000 for the registrations of initial financing statements, and N500 for renewal or amendment. However, these fees may change from time to time, so it is recommended that you check the Collateral Registry website for the up-to-date information.
Under the Collateral Registry Regulation, the secured creditor may enforce its security interest by taking possession of the collateral or rendering the collateral inoperative. Subsequently, it may dispose of the collateral through a sale. The Collateral Registry Regulation permits the secured creditor to proceed extra-judicially without having to obtain a court order before repossessing the collateral. The secured creditor may also choose to apply to the court to authorize enforcement.
Where the proceeds of the sale of the secured assets are insufficient to satisfy the loan, the debtor will be liable for the shortfall. The secured creditor has a right to obtain the balance from the debtor directly or may proceed against other assets of the debtor. The secured creditor may initiate legal action against the debtor for the balance and get a judgment for the amount owed. It may also choose not to take legal action against the debtor and just write off the loss on the loan.

Are Secured Transactions In Movable Assets Already Taking Place?

To a large extent. The Central Bank of Nigeria (CBN) recently disclosed that the National Collateral Registry has assisted over 154,000 Micro, Small and Medium Enterprises (MSMEs) to access N1.2 trillion loans from 628 financial institutions.

The report showed that the number of MSMEs in Nigeria that have used their movable assets to obtain loans from financial institutions through the NCR rose to 154,827 as at December 19, 2018, from 100,049 in the first year, 2017, indicating the increase of 54 percent. The report also showed that 22,251 of the MSMEs were female entrepreneurs. Further breakdown showed that 146,777 of the borrowers were individuals, 3,416 were micro businesses, 2,169 were medium businesses, 1,777 were small businesses and 687 were large businesses.

The number of participating Deposit Money Banks (DMBs) rose to 21 from three in 2017, microfinance banks rose to 551 from 96, Development finance institution rose to four (4) from one(1), merchant banks rose four from one, finance companies rose to 13 from 2 while non interest bank rose to one from zero in 2017.

Click the NCRN User Manual to download a PDF Format of the User Training Manual.

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world.

Facebook: https://web.facebook.com/Afrikanheroes/

Here Is The Nigerian Central Bank ’s Guidelines On How To Access Creative Industry Loan

July 8, 2019

Recall that the Nigerian Central Bank (CBN) in collaboration with the Bankers’ Committee recently introduced the Creative Industry Financing Initiative (CIFI) to improve access to long-term low-cost financing for entrepreneurs and investors in the Nigerian creative and information technology (IT) sub-sectors, as part of efforts to boost job creation in Nigeria, particularly among the youth.

The Bank has gone ahead to announce the modalities for the implementation of the initiative.

In Summary, The Procedure For Accessing The Loan Is As Follows:

Any person interested in accessing the loan should:

Approach any bank of his/her choice with a business plan or statement detailing how much is needed for his/her business.
The bank provides an applicant with the documentation requirements for accessing any of the loan types.
The documentation requirement shall be acceptable by the respective bank for credit requests for its customers.
The bank carries out due diligence of the application and documentation submitted.
Successful applications are issued offer letters, which shall have therewith repayment schedules in accordance with the business dynamics
The successful applicants shall accept the offer as well as meeting all the conditions specified in the offer letter precedent to draw down.
The bank forwards successful application with copies of the offer letter to the Director, Development Finance Department, Central Bank of Nigeria for consideration and release of an aggregate of the facility amount to the bank for lending to a successful application.
The bank disburses funds to successful applicants within ten days of receipt from the CBN
The bank bears the credit risk and shall be responsible for the performance of the facility.

Where Could The Loan Be Accessed From?

Interested persons should visit any money deposit bank in Nigeria — commercial, micro-finance bank, etc.

Nigeria’s Access Bank has already commenced disbursement of loans to beneficiaries in the entertainment industry, under this Creative Industry Financing Initiative of the Central Bank of Nigeria.

The bank said the first tranche of the CIFI loans worth N20bn, would be made easily accessible to the borrowers in the sector.

Other banks are also ready to disburse the loan to prospective applicants.

What Businesses Are Covered And How Much

The businesses that are covered are existing enterprises, startups and students of higher institutions engaged in software development.

Creative Industries Covered are:

Businesses in the fashion (including designing) industry
Businesses in the Information Technology (including e-commerce, online payment solutions, software engineering, etc.)
Businesses in the Nigerian movie industry (including movie producers, movie distributors)
Business in the Nigerian music industry (whether as record labels, music artists, etc.)

Terms & Conditions

For these businesses, the terms and conditions are as follows:

SN	BUSINESS TYPE	MAXIMUM AMOUNT Per Applicant (₦	Interest Rate/ Length of Year Before Repayment
1	Student Studying Software Development	3 million	9% per annum/ 3 years (monthly repayment)
2	IT Businesses	Payment For Equipment Purchase/ Rental Fees	9% per annum; 10 years (quarterly repayment)
3	Movie Production	50 million	9% per annum; 10 years (quarterly repayment)
4	Movie Equipment Financing	50 million	9% per annum; 10 years (quarterly repayment)
5	Movie Distribution	500 million	9% per annum; 10 years (quarterly repayment)
6	Music	Payment For Equipment Purchase/ Rental Fees	9% per annum; 10 years (quarterly repayment)
7	Fashion	Payment For Equipment Purchase/ Rental Fees	9% per annum; 10 years (quarterly repayment)

For further terms and conditions, including guarantors and securities, download, open and read the CBN modalities by clicking on this link

Further inquiries on the modalities may be referred to the Director, Development Finance Department, Central Bank of Nigeria, Abuja.

Why Focus Is On the Creative Industry

The CBN appears to have focused on the creative industry for the following strategic reasons:

The film industry sector contributed 2.3 percent (N239 billion) of Nigeria’s Gross Domestic Product (GDP) in 2016 alone.
In the same year, Nigeria’s music industry grew by 9 percent to reach a value of 39 million dollars and is set to grow by 13.4 percent CAGR by 2021, with an estimated worth of about 73 million dollars.
Information Technology: The gaming industry in Nigeria, according to a PwC study on gaming, benefited from a broadening customer base, mostly the large and youthful population, with Nigeria’s video game industry’s value put at $150 million USD as at 2016. It is also estimated that mobile gaming in Nigeria would surpass $147 million USD by 2020
Aware of this, the Bank of Industry (BoI) in 2015 unveiled plans for members of the Nigerian Creative Industry to access its facilities, as intervention fund to the sector hit N2 billion.

This writer advises that you check out your local banker in Nigeria for more information on how to access the loan.

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world.

Facebook: https://web.facebook.com/Afrikanheroes/

More Funds – Now Available For Nigerian Small And Medium Enterprises

April 25, 2019

The Central Bank of Nigeria has again released the sum of $210,000 million on the Nigerian Interbank Market in continuation of its mediation in the inter-bank foreign exchange market, to sustain the availability of cash in that segment of the market.

From the figures released by the CBN:

Authorized dealers in the wholesale segment of the market, as in previous deals, were offered the sum of $100million.
Those in the Small and Medium Enterprises (SMEs) segment got a boost of $55 million.
Customers purchasing foreign exchange for invisibles such as tuition fees, medical payments and Basic Travel Allowance (BTA), among others, were also allotted a total of $55 million.

Related: Nigerian Forex Market Gets $210m CBN Boost

This has not in any way, however, changed the exchange rate of the Naira as it is still on N360/$1 in the BDC segment of the market, Thursday morning.

Charles Rapulu Udoh

Charles Rapulu Udoh a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organisations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution and data analytics both in Nigeria and across the world.