News: N700 Billion Intervention Funds To Create New Jobs

If the Federal Government's intervention funds through the Central Bank of Nigeria (CBN) are properly channelled and prudently executed across the sectors concerned, they will create millions of direct and indirect jobs.

The government made interventions of N200 billion in the Commercial Agriculture Credit Guarantee Scheme (CACS), N300 billion in the Power and Airline Intervention Fund (PAIF) and N200 billion in the Small and Medium Enterprises Restructuring and Refinancing Facility (SMERRF). Supporting key sectors of the economy via funding from the N700 billion intervention fund and other facilities extended to Small and Medium Enterprises (SMEs) are critical to fixing the the huge army of the unemployed.

Banks have recognised that proper use of the intervention funds will create significant growth potential for the economy and trigger increased job opportunities for Nigerians, especially the youth. Both the CBN and money deposit banks now see the funds as a viable means of building sustainable wealth and keeping the unemployed off the streets.

For the CBN Governor, Godwin Emefiele, the funds are a game changer in tackling the country's job challenges. The CBN had in collaboration with the Federal Ministry of Agriculture and Water Resources established the CACS in 2009. The CACS was meant to finance agricultural value chain from inputs supply to marketing. The scheme commenced operations on April 23, 2009 with the approval of the Federal Government. The CACS was meant to fast-track the development of the agricultural value sector of the economy through the provision of credit facilities at a single digit interest rate to large-scale commercial farmers. The intervention was made in recognition of the number of jobs the agricultural sector can create, from the farm to where the produce are used as raw materials for refined products.

The N300 PAIF was meant to facilitate intervention in the transport sector. It was meant to provide long-term financing that would stimulate private sector participation in the sector. The CBN said the Fund provided the banks a window to finance power sector projects as well as restructure and refinance outstanding facilities in the aviation sector on a long-term basis of about 15 years at a concessionary single digit interest rate of seven per cent.

It said the PAIF helped in relieving the banks of the burden of non-performing loans on their balance sheets and improved the credit rating of the beneficiary institutions, thereby providing them access to additional funds for their operations. As at September 30, 2013, N109.3 billion had been disbursed to 21 firms by 11 banks. The fund, has among others, financed the construction of 125 - kilometre gas-to-power pipeline and the generation of about 800 megawatts (Mw) of power mostly by members of the Manufacturers Association of Nigeria (MAN), principally to guarantee stable and reliable power supply and to free supply from the national grid to other electricity users.

The CBN said the intervention would help ensure a reduction in credit defaults in the sector and harness the entrepreneurial skills in the youths and young graduates. The apex bank said it will through its Anchor-Lending Programme, provide grants and SMES loans to graduates who develop interest in agribusiness. The regulator pledged support for Federal Government's national development agenda and the objective of growing the economy through new jobs and SMEs. "We affirm our commitment to financial deepening of the economy, improving financial access to key sectors of the economy, innovative solutions for the critical financing of generation, distribution and transmission value chain of the power sector, provide finance for SMEs, as well as the agriculture sector and jobs for the youths", Emefiele said. The Executive Director, Ovie Brume Foundation, Mrs. Iwalola Akin-Jimoh, said many suitable graduates are being churned out for jobs that are available, adding that it is important that Nigeria’s educational system is structured in a way that fresh graduates are able to fill vacancies.

On entrepreneurship, Mrs. Akin-Jimoh said: "So, it is even better that people don't graduate and be looking for white collar jobs. They come out with skill that enable, them start their own businesses. So, instead of looking for a job, one can be a job creator. We need people to think more along the line of creating jobs, rather than seeking for jobs."

Banks Key into Projects
Skye Bank, Access Bank, Diamond Bank, First Bank, Ecobank Nigeria Limited, Bank of Industry (BoI), Heritage Bank, among others, have intensified new drives to get SMEs off the ground and keep them running. Bol recently signed a memorandum of understanding (MoU) with Ecobank Nigeria to provide loans at low interest rate to the SMEs sub-sector.

The Managing Director/Chief Executive, BoI, Mr. Rasheed Olaoluwa, said Ecobank and nine other banks were selected based on their support to SMEs, adding that the low interest rate will heighten activities in the sub-sector.
According to the MoU, the 10 banks would provide working capital loans to SMEs qualified by the BoI at interest rate of Monetary Policy Rate (MPR) plus six per cent, with tenor ranging from between six and 12 months. The BoI on the other hand would provide Term Loans to the qualified SMEs at interest rate at between nine and 10 per cent with tenor ranging from three to five years, and moratorium of six to 12 months. He said the BoI and SME friendly banks will collaborate to provide long-term loans to qualified SMEs based on its risk acceptance criteria set by BoI.

The Deputy Managing Director, Ecobank Nigeria, Tony Okpanachi, said the selection of Ecobank by BoI was in recognition of the massive support the bank has offered the sub-sector overtime. He observed that the support has won Ecobank several awards and recognitions in recent times. He further assured that Ecobank will continue to partner other agencies to develop the sub-sector.

The Group Managing Director, Access Bank Plc, Herbert Wigwe, represented by the Executive Director, Personal Banking, Victor Etuokwu, reiterated the bank's commitment to financial empowerment for SMEs and the youths in Africa. At the Africa Sustainable CEO Business Roundtable in Lagos, Wigwe said the bank is financing youth entrepreneurs and SMEs in the continent. He said traditional problems such as access to finance, environment and the right knowledge of the society where they operate, were some of the factors affecting youths.

He said the lender has a team that drives and adds value to SMEs in the bank "What we have done in Access Bank is that we have a team to drive and add values to SMEs. Finance is not the major issue but building capacity, understanding things around. We also have programmes that support women entrepreneurs because we find it interesting working with them," he said.

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An entrepreneur based in Lagos, Monday Okozua, said the SMEs subsector has the capacity to create two-thirds of the job needed to tackle unemployment, making the subsector more significant. He said the subsector holds the ace to taming unemployment in the country and, as such, must be made active if the unemployment rate, put at 28 per cent of adults between 18 and 60, is to drop.

"Nigeria must tackle the challenges of infrastructure, especially power and roads, to create new SMEs or keep existing ones in business. There is also the need to create access to market and provide capacity, especially in keeping company financial records", he said. The CBN defined SMEs according to two parametres. These are an asset base of between N5 million and N500 million, and a staff strength of between 11 and 300.

Banks are increasingly becoming interested in the SMEs sector as yields on government securities drop. Equally, the raising of Cash Reserve Requirement (CRR) on public sector deposit to 75 per cent from 25 per cent makes SMEs the best place for banks to raise cheap deposits.

The Director, Enterprise Development Centre (EDC), Pan Atlantic University, Peter Bankole, said if a country wants to develop, it must start taking SMEs' lending seriously. He said the National Bureau of Statistics (NBS) survey conducted last year showed that the SMEs sector will continue to play a dominant role in job creation in the economy.

Bankole said the challenge remains that the majority of SMEs are micro, stressing that the government was trying to move as many as possible from micro to small businesses because that will give better multiplier effects for the economy and create more jobs.

General Manager, IBM Africa, Taiwo Otiti, said SMEs tools help entrepreneurs manage their businesses properly, and in the process, making it attractive for banks to grant them loans and subsequently create jobs. He said SMEs remain the engine of growth for the economy, adding that they are the largest employer of labour within the economy. He said when the SMs businesses are run well, they will have the capacity to employ more people.

"Part of the SMEs teaching is how to package their businesses to attract bank loans making it easier for them to create jobs", he said. A Lagos-based SMEs Trainer and Facilitator, Chima Maduka, said the subsector constitutes an important vehicle for national development and could integrate a large segment of the populace in productive economic activities. He said the economies of the Asian Tigers or Asian Dragons of the highly free and developed Hong Kong, Singapore, South Korea, and Taiwan, owe their climb to economic pre-eminence largely to the existence of well organised and efficiently run SMEs.

He said SMEs remain a vehicle for employment generation and they provide opportunities for entrepreneurial sourcing, training, development and empowerment. Developing nations such as Nigeria are characterised as low income earners by the World Bank, value SMEs for several reasons.

FirstBank is giving SMEs the opportunity to grow their businesses so they can create jobs. The bank said though the sector has the potential to employ a large portion of the population, lack of support from banks has derailed the sector's vision.

Diamond Bank reiterated its commitment to supporting small and SMEs to contribute to sustainable - economic development. The bank said there was need to empower micro and medium entrepreneurs in areas where there are lack of funds.

Heritage Bank has unveiled plans to provide funding for the micro, small and medium enterprise (MSME) sub-sector of the economy. At its MSME Clinic in Lagos, its Managing Director, Ifie Sekibo expressed the lender's commitment to assisting MSMEs to become large organisations that can be quoted on the Nigeria Stock Exchange (NSE) in the next three years.

Source: The Nation