The Central Bank of Nigeria in a move to revitalise financial inclusion in the country has recently introduced eleven intervention schemes, aimed at increasing access to finance by Non-Interest Financial Institutions, and series of policy guidelines that will govern a new non-interest financing regime.
This announcement was made by Mr. Kevin Amugo, Director, Financial Policy and Regulation, CBN, in a recent directive to all Non-Interest Financial Institutions.
The introduction of these intervention schemes and guidelines has come as part of the strategic programs of the apex bank to support businesses and households which have been negatively impacted by Covid-19.
Eligible activities under the scheme are businesses across the agricultural value chain covering production, inputs supply, storage, processing, logistics and marketing. Others are MSMEs in the real sector (manufacturing, mining, petrochemicals) and in the service sector (ICT, the creative industry, etc).
Elucidating on the intervention schemes, the CBN stated that each scheme has a varying purpose and objective and that financing under the scheme will be for start-ups, business expansion or revival of ailing companies and shall be in compliance with provisions of BOFIA (1991) as amended and the principles underpinning operations of NIFIs.
The objective of the Accelerated Agricultural Development Scheme (AADS), for instance, is to increase agricultural production towards food security, economic diversification and job creation, by funding agriculture production initiatives that will engage a minimum of 370,000 youths over the next three years.
The chief objective of an intervention for the Nigerian Textile Sector is to resuscitate the textile industry and to this end, the CBN mentioned that it has put in place a N50 billion special mechanism for the restructuring of existing facilities and provision of further facilities for textile companies with a genuine need for intervention.
Based on the guidelines for the operations of NIFIs, the CBN would create a Fund to be known as ‘AGSMEIS Non-Interest Fund’ to be domiciled in a dedicated account with the apex bank.
For many years, millions of Nigerians have been excluded from numerous interventions by successive governments because of the insistence on payment of interests in any financing that came with such interventions.
The new non-interest financing on intervention schemes is set to put an end to financial exclusion of manufacturers, agribusiness owners, as well as the non-interest lenders and in turn, grow the economy. It is surely a win-win situation for all parties.