Government Funding Opportunities For SMEs in Nigeria… How To Identify, Target And Apply For Government Funds To Improve Your Chances of Raising The Capital You Need To Start or Grow Your Business

Government funding opportunities may be a viable option for you to start, or grow and develop your business.

There are several different initiatives that the Nigerien government has put in place to assist both small and large businesses with funds, though they are more focused on smaller businesses like yours.

One major reason why the government concentrates on small and medium-sized enterprises (SMEs) is that the SME sector is a key ingredient for a healthy market economy. SMEs make up a huge number of the total businesses in Nigeria. Accordingly, they make big contributions to value-added, and employment.

There are lots of government funding opportunities for small and medium scale enterprises and various government-backed organizations and agencies through which the Federal Government of Nigeria Funds these businesses. These include:

ü Central Bank of Nigeria (CBN) Intervention Scheme

ü Bank of Agriculture (BOA)

ü Bank of Industry (BOI)

ü Development Bank of Nigeria (DBN)

ü Nigerian Export-Import Bank (NEXIM)

ü Small and Medium Enterprises Development Agency of Nigeria (SMEDAN)

For the purpose of this study, we will be focusing on…

THE CENTRAL BANK OF NIGERIA (CBN) INTERVENTION SCHEMES:

The Federal Government, through the Central Bank of Nigeria, has put in place several intervention programmes to boost the economy.

But we must understand that these intervention schemes are purpose-driven, they are functionally based and also well thought out.

The CBN interventions are born out of the critical issues within our economic space. The whole essence is to meet the target of financial inclusion, among others.

Let’s consider some of the CBN interventions available:

1. CBN AGSMEIS Loan For SME’S And Agricultural Businesses Without Collateral – The Central Bank of Nigeria (CBN) and the Bankers’ Committee, created the Agri-Business/Small and Medium Enterprise Investment Scheme AGSMEIS Loan, as an initiative to support the Federal Government’s efforts in the promotion of agricultural businesses and small/medium enterprises (SMEs) in the country. You can apply for the loan without collateral. The AGSMEIS loan is been disbursed by NIRSAL Microfinance Bank and other Banks. Interested Nigerians engaged in Agriculture or other SME businesses can access up to N10 Million from the AGSMEIS Loan, at a single-digit interest rate of 9% per annum.

2. CBN Anchor Borrowers Programme (ABP) Intervention For Agriculture – The ABP is an initiative of the Central Bank of Nigeria (CBN) for the agricultural sector, it is in line with the developmental function of the apex bank.

The loan is targeted at smallholder farmers engaged in the production of identified commodities across the country. The Farmers are expected to be in groups/cooperative(s) of between 5 and 20 people for ease of administration.

The ABP is not solely for farmers, other businesses can also apply to become the Anchor (private large-scale integrated processors) and Inputs Suppliers.

3. CBN Non-Interest Accelerated Agricultural Development Scheme (AADS} Loan – The objective of the Accelerated Agricultural Development Scheme (AADS) scheme according to CBN, is to engage a minimum of 370,000 youths in agricultural production across the country over the next three years in order to reduce unemployment among the youths in the country and increase agricultural production towards food security, job creation, and economic diversification. The beneficiary must be a Nigerian youth with the ages of 18 to 35 years and must sign an undertaking to abide by the terms of agreement of the Scheme.

4. CBN MSMEDF Loan – Micro, Small And Medium Enterprises Development Fund – The Central Bank of Nigeria (CBN), having identified the huge financing gap which hinders the development of MSMEs, launched the Micro, Small and Medium Enterprises Development Fund as part of its developmental role and mandate of promoting a sound financial system.

In line with the provisions of the revised microfinance policy, regulatory and supervisory framework for Nigeria, only Micro Enterprises and SMEs including –Agricultural value chain, Cottage Industries, Artisans, Service Providers, Renewable energy/energy efficient product and technologies, Trade and general commerce, and other economic activities as may be prescribed by the CBN are eligible for funding under this scheme.

5. CBN Loan For The Creative Industry Financing Initiative(Creative Industry Loan) – The Central Bank of Nigeria (CBN) in collaboration with the Bankers’ Committee developed a Creative Industry Financing Initiative (CIFI), also known as Creative Industry loan to boost job creation in Nigeria, especially among young people, who are the most active in the creative industry. The aim according to CBN, is to improve access to long-term low-cost financing for entrepreneurs and investors in the Nigerian creative and information technology (IT) sub-sectors.

6. CBN Guidelines On How To Access Healthcare Research And Development Grants – The Central Bank of Nigeria (CBN) has released the guidelines for interested candidates to access funds under the Healthcare Sector Research and Development Intervention Scheme (HSRDIS) grant. The Healthcare Research And Development Grant, according to CBN, aims to strengthen the public healthcare system with innovative financing of research and development (R&D) in new and improved drugs, vaccines, and diagnostics of infectious diseases in Nigeria and is accessible to biotechnological and pharmaceutical companies, institutions, researchers, and research institutes for the research and development of drugs, herbal medicines, and vaccines for the control, prevention, and treatment of infectious diseases.

Who Can Get A Government Loan?

Anyone in Nigeria is eligible for a Federal Government of Nigeria loan — as long as you either have a business or want to start one.

Depending on the loan you are applying for, your business does not necessarily have to be registered with the Corporate Affairs Commission (CAC) — in order to qualify. However, you’d usually be required to register, as part of the funding program or initiative in question.

Both limited liability companies and registered business names are eligible for an FGN loan. Typically, the amount that you can apply for, as a limited company, is much greater.

Loans from the Federal Government, are managed and disbursed by several different government agencies. Every agency will have its own specific requirements or lending criteria.

Depending on the credit facility in question, government loans may be used for a variety of things such as — leasing equipment, buying stock, or simply as a startup loan.

Government funding opportunities do not support loans for things such as buying real estate.

How Do You Apply For A Government Loan In Nigeria?

Applying for a government loan involves researching and finding a scheme — that you are both qualified for, and that is suitable for your business needs.

As most loans are handled by specific government agencies — you will need to either apply directly to these agencies or apply through a participating commercial bank.

Some applications may be available online, but most usually involve you going to an appropriate office or branch — to make an application in person. Be careful not to fall into scam.

Your business’ suitability and the loan purpose would be assessed — according to the guidelines of the credit facility or the funding program in question, if your application for funding is approved, funds will be advanced to you — according to the terms of any approval letter.

Based on the agency and loan product on offer, FGN loans come with a variety of different interest rates and repayment plans.Your ability to pay back without defaulting qualifies you for a higher amount with less stringent requirements.

We invite your comments and questions on this topic and, if there are other topics that you would like us to discuss, kindly send them via email to [email protected] and we will treat them!