LagosThe Bankers Committee said that banks will contribute about N30 billion of their profit after tax in a newly created Agriculture/Small and Medium Enterprises, SME, fund, designed to support the funding and access to finance by SMEs and primary agriculture.
These were part of a series of measures taken 8th annual Bankers Committee retreat to facilitate the recovery of the economy from negative growth.
Governor, Central Bank of Nigeria (CBN) Mr. Godwin Emefiele disclosed this at the end of the 8th annual Bankers Committee retreat held in Lagos over the weekend.
He said, The CBN will together with the banking sector establish an Agriculture/SME fund (AGSME Fund) from contributions of a portion on profit after taxes of Deposit Money Banks as a deliberate strategy to support the funding and access to finance by SMEs and primary agriculture.
The modality for the fund will be operating as an Equity Fund will be worked upon by the Bankers Committee and will be communicated in due course.
Elaborating further, he said, You know in the past we had the Small and Medium Enterprises Equity Investment Scheme (SMEEIS) fund where the banks contributed a portion of their profit, but that scheme was abandoned. So, we thought that this time when there is need to really stimulate growth and because we also know that having equity funds by investors, particularly local investors, has always been a thing in achieving the objective of agriculture and SMEs, we decided that the banks and the CBN would commit certain percentage of their funds to support this endeavour. The CBN would continue to provide intervention funds at single digit interest rates as usual.
Responding to questions on the likelihood that the banks may not be committed to investing their profit, as experienced in the implementation of SMEEIS, Emefiele said: The SMEEIS fund was left in banks provision accounts. But this time, once the profit of the banks, like in this case, their 2016 results would be out latest April 2017, they would provide the percentage we agree from their profit after tax and the fund would be warehoused at the CBN. Hopefully, before or about that time, some of the projects that we contemplate would go under this fund would have been identified.
By our estimation take-off is January 1, but those projects would not be available until around March or April after the banks audited accounts have been presented to the public. Our initial experience is that you dont need more than N30 billion to start with.
Speaking on the Bankers Committee plan for 2017, Emefiele said: The Bankers Committee will continue to collaborate in a deliberate manner to promote an efficient and stable economy to deliver on price stability, financial system stability and financial inclusion and economic growth. The Bankers Committee has defined goals for 2017 to include: Supporting government efforts to develop adequate infrastructure to engender viable and productive SMEs; Increasing access and cost of funding particularly the agriculture and manufacturing SMEs; We will identify opportunities to provide funding and necessary support for agriculture and manufacturing SMEs including structures and systems to improve the ease of regulatory compliance.