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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

This Kenyan Startup Has Just Secured $330k In Debt Finance

July 25, 2019

Optimetriks, the Kenyan sales force automation startup has just defied odds and gone after debt finance. A whole $330,000 debt facility (loan) to grow its customer base and add new features? For a startup that was founded in 2016, this appears a life-saving option. But then, why not fund-raising?

Here Is The Deal

Debt financing came from French commercial banks.
The startup intends to use finance to grow its customer base and add new features.
Optimetriks currently serves more than 25 companies across 16 countries in Africa, with its clients operating in sectors such as beauty, telecommunications, food, and professional services. Last month, it took on EUR300,000 (US$335,000) in debt financing from commercial banks in France to fund its growth, with Langlois-Meurinne saying this will go towards product development.

Why Debt Financing?

Although debt financing is an option for fundraisers, so much remains to be said about the strong terms under which loans are given. Optimetriks does not appear to be desperately resorting to borrowing as the nearest funding alternative to remaining in business, however.

The Kenyan startup has previously received grant funding from the GSMA in 2017 and took part in the Francophone Africa-focused L’Afrique Excelle accelerator program earlier this year and has bootstrapped until now. It could also take on Series A investment soon.

“As our company has matured, and based on our existing traction, we are now considering fundraising in the coming months, to benefit from strategic investors, knowledge of East Africa, and consumer goods distribution,” said Langlois-Meurinne.

About Optimetriks

Founded in 2016, Optimetriks has developed a sales force automation platform that helps consumer goods companies and distributors digitize their workflows and operations.

“Typical use cases are route management, defining where the sales representatives need to pass, checking on visits and productivity, providing guidance and background information on the retailers they engage with, outlet management, checking on stock levels, and things like that,” said Paul Langlois-Meurinne, the startup’s co-founder and chief executive officer (CEO).

Optimetriks, which makes money from license and service fees, was launched in a bid to solve key problems in African distribution.

“First, the lack of reliable market information and the costs and limitations that exist when trying to collect and analyse data at a large scale,” Langlois-Meurinne said.

“Second, the fact that there are information asymmetries and sometimes misaligned interests between the actors of the ecosystem. Finally, the fact that middlemen take unnecessary margins at the expense of retailers, and distort the value chain.”

The Optimetriks platform aims to bring more transparency and visibility to the distribution space, and help companies better understand how their resources are being employed.

“We help our clients implement scientific distribution that is data-driven, where every action is logged in the system, and can be tracked. Our clients access our platform either through the mobile app for the field users, or the web app, for office users who need to navigate in the reporting dashboards and configure the deployment.,” said Langlois-Meurinne.

“Our ambition is to be the reference platform that connects directly and on a daily basis consumer goods brands with the millions of African retailers that distribute their products on several key dimensions.”

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/

Namibia Is The Easiest Country In Africa For Small Businesses To Get Bank Loan

July 22, 2019

If you think that it is harder for small and medium-sized businesses to get loans from banks in Namibia, this is a chance to think again. A new report is saying Namibia is the best place in Africa for small scale businesses to get credit facilities from banks.

The 2019 Small and Medium-sized Enterprises (SME) Competitiveness outlook developed by the International Trade Centre (ITC) indicates that banks in Namibia are providing a high degree of investment relative to more than two-fifths of the countries examined in the survey.

A Look At The Report

The report presents what it calls an “SME Competitiveness Grid” which allocates scores to the various sizes of enterprises in Namibia— small, medium and large — for various aspects of business services available to them using key indicators such as a country’s Gross Domestic Products (GDP) per capita, current account surplus, deficit and share of GDP, Tariff preference margin and many others.

Small Businesses

In Namibia, small businesses are scored at 76.6 percent with regards to investment financed by banks which is well above the threshold score of 22.4 percent below which the availability of a business service is assessed as weak. This is the highest in Africa, closely followed by Kenya at 65.2 percent. Botswana is third at 62.5 percent. Following Botswana is Mali which is fourth at 61.9 percent. Africa’s largest economy, Nigeria was scored 15.8%. At this rate, it is hardest for small businesses to get a loan in Congo DR at 4.1% or in Sierra Leone at 4.7%

This figure means that small enterprises have far more access to bank financing in Namibia compared to other African countries and also compared to Namibian medium and large-sized counterparts. The survey regards any score over 67.3 percent as strong and in Namibia, only large-sized firms are assessed to have strong access to finance, although medium-sized enterprises come close.

Central and South American countries scored the highest in this regard with Chile scoring 85.6 percent, Dominican Republic 86.0 percent, Nicaragua 68.7 percent, and Guatemala 61.7 percent as prime examples.

Conversely, sub-Saharan African countries fared poorly. Surprisingly, Liberia scored a relatively high 46.6 percent but neighboring Nigeria recorded a low 15.8 percent.

Read Also: There Are Now Over 41.543 Million Micro, Small & Medium Enterprises In Nigeria

Medium and large

It is easiest for medium scale businesses in Kenya at 70.6% to get bank loans compared to their counterparts in Africa. In this regard, Namibia scored 56.3 percent. It is also easiest for large scale companies in Burundi at 83.5% to get loans compared to their counterparts across Africa.

This indicates that activities in Namibia’s banking sector gravitate heavily towards the financing of small scale businesses making it increasingly possible for small, medium and larger businesses to attract the needed investments from various banks.

It is deemed that SMEs contribute to the Sustainable Development Goals (SDGs) through the jobs and wages they provide to their respective employees; their business practices; the sector in which they operate as well as their contribution to the national economy.

Financial institutions in most cases do not extend substantial credit facility to SMEs, most especially in the developing countries to either expand their business or make direct investment owing to the lack of information on SME creditworthiness which in turn leads to high perceived risks.

This recent outlook is, therefore, making a strong case on the need to encourage continuous investments in the country’s small business sector in order to realize the SDGs.

It is in this regard that the ITC is advocating that local financial institutions namely banks, insurance providers and microcredit agencies playing an effective role by providing information on SMEs such as credit history, that is necessary to accurately assess performance risk.

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/

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/

Kenyan Loan Guarantors May Soon Be Hard To Be Sued

May 8, 2019

Barring any last minutes changes, loan guarantors in Kenya may soon be hard to be dragged to court. This is because Kenyan National Assembly’s Committee on Justice and Legal Affairs has approved, for passage into law, the Kenyan Law of Contract (Amendment) Bill, 2019. The Bill proposes that in case of a default to repay loan by the principal borrower, the creditor should first auction the assets of the principal borrower before making for the property of guarantors.

A Breakdown of The Bill:

The law will only apply to cases that take place after the Bill becomes law, while the status quo shall remain for current cases.

The Bill seeks to amend Law of Contract Act, Cap 23 of Kenya.

The new position also provides that no suit shall be brought against a guarantor of any debt or promise unless the agreement is in writing and signed by the guarantor.

Related: World Bank Approves $250 Million Loan for Kenya’s Affordable Housing Project

The move may not be unconnected with the decision of the Kenyan high court last year which allowed banks and other financial service providers to blacklist guarantors with Credit Reference Bureaus (CRB) in case of bad loans.

The ruling was made in a case where one Obadiah Gitonga had sued Cooperative Bank for blacklisting him over a defaulted loan where he was the guarantor. Mr Gitonga demanded to be delisted from CRB, a request the court denied saying that the bank acted within the precincts of the law.

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.

How To Access The Nigerian Central Bank’s Loan For Businesses In The Creative Industry

Owners of businesses in the Nigerian creative industry now have access to loans as high as ₦500,000,000 (about $1.4 million). This is according to Nigeria’s Central Bank’s recent disclosure.

The Creative Industries That Are Covered:

According to the CBN, which is collaborating with the body of top officers of deposit banks in Nigeria (the Banker’s Committee), the Creative Industry Financing Initiative is targeted at:

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 artistes, etc.)

Maximum Amounts Each of These Businesses May Get

The businesses may get up to the following amount:

A student of Software Engineering anywhere in Nigeria may get up to ₦3 million ($ 8,294) to boost his education.
Movie Production businesses may get a maximum of ₦30 million ($82,943) to boost their businesses.
Movie distribution businesses may get up to ₦500 million ( $1.4 million)
Businesses in the Nigerian Fashion and Information Technology can also get funds to cover their rental/service fees (the exact amounts were not specified)
Music Businesses may also get funds to cover their training fees, equipment fees, and rental/service fees.(The exact amount is however not specified. It also appears that the funds are not extended to businesses of production of music, and other related music roles)

Interest Rate and Dates of Repayment

The new Initiative pegs on any of the amount borrowed, the interest rate of 9 percent per year, including all charges. This is below the national lending rate of 13.5%, meaning that businesses that accessed loans through the Creative Industry Financing Initiative would be 4.3% more profitable than would be the case if they go through Nigerian commercial banks.

The Repayment Schedule for Each of the Loaned Amounts Include:

Loan under each category would be due for repayment as follows:

For Software Engineering Student Loan, it is a maximum of three years (This could be criticized because Nigerian school system runs for a full four-year academic calendar period, and the time may be too short to begin to reap the benefits of such loans, even if a lesser program is subscribed for).
For Movie Production and Distribution, it is a maximum of ten years.
For Fashion, Information Technology (IT) and Music, it is a maximum of ten year
Normal lending period can be as long as 36 months (three years) or more, depending on the loan agreement.

How To Procure The Loan

The Central Bank of Nigeria’s disclosure hints that any business in any of these categories desiring to procure the loan would need to do the following:

Prepare its business plan or statement on how much is needed for the business. However, it would also be noted that feasibility reports of the intended projects may be required.
Proceed to any commercial bank or the applicable financial institutions to access the fund. Hence, all commercial banks in Nigeria are expected to be part of the program.
In an application to the bank, state how much is needed to fund the business. The application should be made pursuant to the CBN Creative Industry Financing Initiative.
The commercial bank will discuss the request and provide the business owner the money.

What Would Be Needed To Discuss The Request Further?

The circular is however silent about whether collateral is needed for the loan. Banks are however expected to be tough to some degree since they bear the risk of bad loan performance. So, businesses should expect to pass through some tough risk management procedures to be able to access the loans.
Most Nigerian banks require, on minimum, the following documents in order to be able to process the loan application: Application letter; Duly completed Retail Loan Application Form; Proforma Invoice from the banks’ approved vendors; Business Profile; Current utility bill; Latest Audited Account; Six (6) Months Bank Statement; Other KYC requirements for opening a corporate or business account.

It could be noted however that the loans may be targeted at existing and profitable businesses, with good balance sheets, and not new businesses with no financial track records, except in exceptional circumstances.

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 per cent (N239 billion) of Nigeria’s Gross Domestic Product (GDP) in 2016 alone.
In the same year, Nigeria’s music industry grew by 9 per cent to reach a value of 39 million dollars, and is set to grow by 13.4 per cent 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 the 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

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 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.