Access to finance is a big deal for many small businesses, and particular in agribusiness. But, there may be a way to access loans of up to 10 million, and some guidelines were given recently at a sensitization programme in Lagos by the Agric and Agro-allied group of the Lagos Chamber of Commerce and Industry (LCCI), and the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN).
The loans are to be provided through the Agri-Business/Small and Medium Enterprises Investment Scheme (AGSMEIS), by the Central Bank of Nigeria (CBN). Objectives of the scheme are to:
Ensure access to finance for Small and Medium Enterprises (SMEs), as these enterprises are the engine of the growth of the Nigerian economy.
Generate much needed employment opportunities in Nigeria
Develop agricultural value chain and ensure sustainable agricultural practices
Boost the managerial capacity of Agribusiness/SMEs as pipelines of growing enterprises that can become large corporate organisations
Bunmi Kole-Dawodu, state manager for SMEDAN, Ogun state was recently in Lagos at the invitation of the Agric and Agro-allied group of LCCI to provide sensitisation for those interested in securing the loans.
In a phone interview this week, Kole-Dawodu, gave a brief breakdown of some things to be noted by those who are interested in the loans. He explained that;
The scheme operates at five percent interest rate, seven years repayment plan, and 18 months moratorium.
Those applying for the loan need to write their business plan which SMEDAN offers to provide assistance for free, at least according to Kole-Dawodu.
The four stakeholders involved in the process are; CBN, Borrowers, Participating Financial institutions, and the Entrepreneurship Development Institute.
For those who do not have requisite training in managing the business, they need to get this done, and it is provided by the EDI which sends your business plan to CBN. The CBN in turn sends the business plan, request for equipment (and other supporting documents) to the Participating Financial Institutions for valuation. Once this is done, it goes back to the CBN, where they in turn do their own evaluation and it goes back to the PFI, subsequent to which funds can be released to the entrepreneur.
An interesting component of the loan is the five percent interest rate, which is a far better deal than the 22 – 30 percent usually offered by banks.
Tunji Falade, chairman, agric and agro-allied group, LCCI, noted that looking critically around the world “you’ll discover that one of the potent strategies that countries which developed their economies adopted was deploying long term, low interest, single digit interest rates for SME’s and operators in Agribusiness to support their operations.
“As Nigeria’s population is growing, so should the economy be structured for sustainable growth through the operations of Agribusiness and SMEs,” Falade told BusinessDay.
He also explained that this informed the decision by the LCCI Agric. & Agro- Allied Sector in collaboration with SMEDAN, to organise the one day sensitization programme for members, on how to access the CBN Loan for Agric/SMEs under the Agribusiness Small and Medium Enterprises Investment Scheme (AGSMEIS).
Furthermore, a SMEDAN participation certificate which according to him, is a requirement to access the loan will be provided for participants in the programme.
Falade further reiterated that “it has been projected that Nigeria will be the third most populated country in the world by year 2050. The report didn’t say Nigeria will be the third investment destination of the world, or the third country in the world in terms of food security, or industrial infrastructure. We as a nation must aggressively increase food production, and develop diverse infrastructure to match this population increase. Therefore, you will agree with me that Nigeria SME’s and operators of Agribusiness need to be empowered to stimulate economic activities to create wealth and the much needed employment in our country.”
A scheme of this nature could help agribusinesses and SMEs leapfrog to financial hurdles to scale up production to meet demands of the growing population.
