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Low funds uptake hinders CBN’s MSMEs schemes

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Intervention schemes established by the Central Bank of Nigeria (CBN) to boost micro small and medium enterprises (MSMEs) seem to be struggling as only a negligible number of these businesses have accessed the Funds. Tony Chukwunyem writes

 

Given that it was one of the key issues discussed at the last Bankers’ Committee annual retreat, journalists invited to attend the usual press briefing held at the end of the Committee’s meeting in Lagos last Tuesday, had expected some sort of update on the Agri-Business, Small and Medium Enterprises Investment Scheme (AGSMEIS), which was scheduled to have taken off last month.
So when none of the officials of the Bankers’ Committee mandated to brief the press mentioned the issue, a few journalists present at the event raised it during the question and answer session.
Responding to the inquiries, the Director, Banking Supervision, CBN, Ahmad Abdullahi, said that the AGSMEIS was actually one of the issues discussed in detail at the meeting and that the modalities for the full commencement of the scheme this month had been finalised.
He said: “We had detailed discussions on the issues agreed at the last retreat and the modalities for disbursements have been agreed. By February, we would see traction in that regard.”
He, however, stated that now that the modalities are out, “It is left for the customers to come forward.”
Urging the media to help advertise the scheme, the CBN Director pledged that, from this month, banks will step up efforts to ensure that disbursement of the AGSMEIS, which was estimated to have hit N60 billion by the end of last year, fully commences.

AGSMEIS disbursed stalled
Interestingly, at the last Bankers’ Committee retreat, the Governor of the CBN, Mr. Godwin Emefiele, had expressed concern that since the scheme took off early in 2017, “not a penny” had been disbursed.
Indeed, he revealed that it was as a result of this development that the framework for accessing the scheme as well as the N220billion MSMEs Development Fund was being reviewed to allow easy access by small businesses at an even cheaper rate.
According to the CBN Governor, the structure of the AGSMEIS, which was designed to be an equity fund will change effective this year to ensure that at least N13 billion of the fund was disbursed by February this year and another N25 billion by April.
Although it was initially established for agricultural related businesses, Emefiele said the Bankers’ Committee had agreed to extend the AGSMEIS to small businesses and artisans as part of measures to create employment and stimulate the Nigerian economy.
He explained that barbers, hairdressers, make-up artists, and other small business ventures will have access to 50 per cent of the fund, adding that by the end of last year, about N30 billion would be available through banks for on-lending to small businesses at five per cent payable over a period of seven years.
He stressed that there will not be direct cash disbursement as the larger part of the fund released will be used to purchase the needed equipment and tools of trade while a smaller portion will be given as running costs.
“There are those who want to go into barber shop business, hair dressing business, we want to make this fund available to them,” he stated, adding that the CBN through its Enterprise Development Center (EDC) in conjunction with the National Youth Service Corps and other government entrepreneurship training agencies will provide training for the small business owners who want to access the fund.
Emefiele said: “In fact, we are going to bring tiling for those who want to do tiling; you will learn tiling and we will give them equipment for the tiling. You want to do POP plastering and so on, we will bring them in because we feel these are the weak and vulnerable people that need assistance that may not even have the opportunity of working at the bank and that will need to open a channel through, which they can walk into a bank and access facilities from the bank.”

N220bn MSMEDF disbursement
Similarly, shedding light on why the apex bank was also reviewing the framework for the N220billion MSMEs Development Fund, the CBN boss disclosed that since disbursement of the Fund commenced in 2014, less than half of it had been drawn.
The banking watchdog had established the N220billion MSMEDF in August 2013 as part of measures aimed at addressing the massive financing challenges faced by operators in the country’s MSME sub-sector. Significantly, the guidelines of the Fund stipulated that 60 per cent of the Fund be set aside for women given the peculiar reasons why they are generally more financially excluded than men.
It (CBN) also stated that each of Nigeria’s 36 states will be able to access N2 billion of the Fund, which will be administered to beneficiaries at an interest rate below 9 percent. Furthermore, to access the Fund, the CBN had asked MSMEs to apply through Participating Financial Institutions (PFIs)- Bank of Industry (BoI) and commercial banks- as its statutes do not allow it to deal directly with businesses on such issues.
But despite being one of the CBN’s most important intervention schemes, given the vital role MSMES play in the economy, the N220billion MSMEDF’s impact on the economy is yet to be fully felt due to the fact, as confirmed by the CBN Governor, that less than half of it had been drawn since its establishment four years ago.
Specifically, in December 2016, Emefiele had during a session with Ogun State farmers expressed concern that only about 36 per cent of the N220 billion fund had been accessed.
However, while latest figures obtained from the CBN put the total amount so far disbursed from the Fund to MSMEs at about N76 billion, the consensus among major MSME associations in the country is that majority of their members have been unable to access a kobo from the Fund.

‘Stringent conditions’
For instance, National President of the Association of Small Business Owners of Nigeria (ASBON), Mr. Femi Egbesola, recently said that the Fund was very difficult to access because the conditions attached to it are so stringent that most MSMEs cannot comply with them.
Noting that more than half of the Fund had not been accessed, he argued: “If you have a Fund of N200 billion for MSMEs and less than N100 billion has been accessed for a period of more than four years, that means it is not a success.”
Similarly, Vice President, Small and Medium Industries (SMI) group of Manufacturers Association of Nigeria (MAN), Alhaji Ali Madugu, was late last year quoted by a national daily as saying : “A lot of our members applied but they could not access the fund because there are conditionalities and processes, and you don’t go direct to CBN; you have to apply through commercial banks. Up to the fourth quarter of 2016, only few of our members said they were able to access the loan.”
In the same vein, Chairman, Nigerian Association of Small Scale Industrialists, (NASSI) Lagos Chapter, Kuti George, stated: “ None of our over 3,500 members have been able to access the N200billion MSMEDF . The major reason is the conditions stipulated to access the loan; if they want to do something that will work, let them go and learn from the Lagos State Employment Trust Fund (LSETF). Within a year of conception of the scheme, they have been able to lend to over 1,000 small businesses. Let them go and learn how LSETF did their own.”

Ambode’s stance
Interestingly, the Governor of Lagos state, Akinwunmi Ambode, had in his address to the Bankers’ Committee annual retreat last December called on the CBN to release the N220 billion MSMEDF to states to disburse at five per cent to small businesses, pointing out that half of the fund is yet to be accessed.
The Governor, who stressed the need to abandon a profit making goal in achieving the ambition of growing the economy, disclosed that the state had so far given out N10 billion through its employment trust fund at five per cent.
According to him, banks and the CBN should realise that profit must not be the main goal if they are to ensure funding for critical sectors targeted at creating jobs, lifting citizens out of poverty and growing the economy.
He stated: “If you want to activate a particular sector of which the majority of Nigerians are in, you have to shut your eye to profit making. If you want to touch them (small businesses), there has to be something different about the loan. Don’t forget also it is not a commercial loan; it is money from the CBN to the banks who are just intermediaries to give it to the poor people. So if you give me, I will give them at five per cent.”
However, analysts have also identified other factors hindering MSMEs from accessing the Fund. These include inefficiencies on the part of the businesses in terms of documentation, low public awareness about the process for applying it and the inability of applicants to develop bankable business plans.
A financial analyst, Mr. Joseph Aigbedion, urged the banking watchdog to identify and urgently address the issues hindering MSMEs from accessing the Fund, stating that the sub-sector is key to the growth of the economy.
He said: “It is hard to believe that the CBN and banks are deliberately withholding the MSMEs intervention Funds. This is because the healthy growth of this sub sector will boost the economy and positively impact the banks. I believe the CBN should engage more with MSMEs operators to find out the challenges they are facing in accessing the Funds. ”

Last line
Perhaps, the banking watchdog has already engaged with stakeholders on how to improve on the disbursement of the Funds given the pledge by the Director, Banking Supervision, CBN, Ahmad Abdullahi, last Tuesday, that industry watchers will notice a positive difference this month.

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Stock market opens week bearish

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Trading activities on the floor of the Nigerian Stock Exchange (NSE) market yesterday opened this week on  the negative territory as the overall performance measures, NSE ASI and market capitalisation, both fell by 1.53 per cent.

 

The downswing according to market watchers, was due to profit taking by investors after recent bullish rally.

 

Consequently, the All-Share Index dropped by 651.09 basis points or 1.53 per cent from 42,638.83 index points last Friday to close at 41,987.74, while the market capitalisation of equities depreciated by N234 billion or 1.53 per cent to close at N15.067 trillion from N15.301 trillion.

 

Further analysis of the day’s trading showed that Linkage Assurance Plc topped the day’s gainers’ table with 9.09 per cent to close at 96 kobo per share, while Livestock Feeds Plc followed with five per cent to close at N1.05 per share. Fidson Healthcare Plc added 4.92 per cent to close at N4.69 per share.

 

On the flip side, PZ Cussons Nigeria Plc led the losers’ chart with a dip of 8 per cent to close at N23.00 per share. Lasaco Insurance Plc shed 6.06 per cent to close at 31 kobo per share. Enamelwa Nigeria Plc followed with 4.95 per cent to close at 22 kobo per share.

 

Market turnover closed negative as volume moved down by -64.80 per cent as against +32.62 per cent uptick recorded in the previous session. Skye Bank Plc, Diamond Bank Plc and FCMB Plc were the most active stocks that boosted market turnover while Zenith Bank Plc and Guinness Nigeria Plc topped market value list.

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Nigeria mulls 700,000 barrels daily oil output surge

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…envisages 250,000 barrels from local producers

 

Nigeria is planning an increase of 700,000 barrels a day in her oil production. Data from the Ministry of Petroleum Resources sighted by New Telegraph showed that indigenous producers from the country aim to pump almost 250,000 barrels per day additional crude by 2020 as part of a wider plan for the nation to lift output to 2.5 million a day.

“We are on course,” Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, who confirmed the data, said in Abuja last weekend, just as he intimated newsmen of the goal to pump 2.5 million barrels a day by 2020. “Capacity-wise, the volumes are there. Infrastructure-wise we suffer a little bit in terms of being able to deliver.”

There are at least a dozen small to mid-sized Nigerian producers pumping between 5,000 and 100,000 barrels each day. Together, they plan to add incremental supply of at least 150,000 barrels a day this year. Aiteo E & P Ltd., Nigeria’s largest independent, didn’t immediately comment about its expansion plans. Shoreline Group, the third-biggest independent, the data showed, wants to double output by December with Seplat Petroleum Development Company, the second-largest, also intending to produce more.

” In all, the country’s total planned increase, a report adapted from the data showed, is 700,000 barrels a day. “Just over a third will come from the state-run Nigeria Petroleum Development Co., a third from independents, and the remainder from oil majors.

The expansion depends, among other things, on peace being maintained in the Niger Delta. A militant group said last month it would attack oil and gas facilities,” the data adapted by Bloomberg showed. “One probability is at least some of the extra Nigerian supply will end up feeding the Dangote oil refinery, the continent’s largest, which is due to start operating next year. While doing that would help rid Nigeria of its dependence on fuels produced overseas, it wouldn’t extricate the country from its commitments to OPEC.

“Back in 2016, Shoreline had to cancel a planned $500 million Eurobond. With oil prices rallying, the company is making a comeback. It agreed a $530 million deal with financiers led by Vitol Group, the world’s biggest independent oil trader, as it seeks to double crude output to 100,000 barrels a day by year end.

“It represents a massive vote of confidence in the future growth of our operations and of Nigerian upstream producers,” Kola Karim, chief executive officer of Shoreline, said in an interview.

“Shoreline’s progress mirrors that of other Nigerian independents.Seplat, said to be among companies bidding for Petroleo Brasileiro SA’s African oilfields, expects to ramp up drilling this year after output recovered from militant attacks and low prices, according to company statements,” the report said. Half a decade ago, these producers were hailed as the future of Nigeria’s production because of their potential to pump 40 percent of the OPEC member’s output. They had bought oilfields that hold at least a third of the West African nation’s 37.5 billion barrels of crude reserves from companies including Royal Dutch Shell Plc, Total SA, and Eni SpA. Their day may still come.

The OPEC deal is currently in place until the end of this year and global demand is rising fast. The International Energy Agency this month revised up its growth estimate for world oil consumption by 100,000 barrels a day, taking it up to 1.4 million.

“As the oil market rebalances in the years ahead, OPEC will have to lift its production cap,” Pabina Yinkere, an energy analyst at Lagos-based Vetiva Capital Management, said by phone, adding that a lot of extra Nigerian crude could be used to feed the Dangote refinery.

“Moves to raise production are in view of expected demand growth.” The oil producers in Nigeria are planning to add barrels at the same time as Nigeria participates in a global pact to restrict oil supply that’s being led by the Organization of Petroleum Exporting Countries and non-member nations including Russia. If any one country relents – and similar internal pressures are bubbling up elsewhere – then the entire deal could come under strain.

“If they can pump more in Nigeria, I don’t see why they wouldn’t,” Warren Patterson, a commodity strategist at ING Bank NV, said. “If you get Nigeria exceeding the cap, then you’re going to get others who pump a little bit more. The longer the deal goes on for, the more likely it’s going to fall apart.”

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2018: Experts predict vibrant real estate

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As oil prices stabilise at 17 per cent higher than 2017 average and direct foreign investment increases, experts see surge in real estate activities in 2018. DAYO AYEYEMI reports

 

Following improvement in the economy, things are beginning to look up in Nigeria’s real estate sector with market operators getting set to tap into the opportunities, which exist in various segments of the market.

They were, however, particular about the low and middle income residential, millennial and student accommodation sections. Apparently equipped with the dynamism of happenings in the economy, they stated that investors (both local and foreign) were prepared to launch into pockets of opportunities in real estate market. Investors’ hope has been further boosted by the latest Bismack Rewane-led Financial Derivative Company (FDC)’s report on review of third quarter of 2017, which showed that Foreign Capital Inflows (FCI) to Nigeria increased by 148 per cent to $4.15 billion.

This positive trend, analysts said, happened as a result of renewed investor confidence in the economy. Also, the experts noted that oil prices had climbed to 17 per cent higher than 2017 average, expressing confidence that if the situation persists, oil revenues might help mitigate consequences of capital flight.

Current development

This newspaper gathered that while some developers are entering into Joint Ventures (JV) with the government to provide affordable housing units for citizens, others are currently repackaging their products to attract financiers and buyers.

In exclusive neighbourhoods such as Ikoyi, Victoria Island and Lekki, where landlords can no longer wait without getting tenants and buyers for their dormant properties, they have been converting their vacant houses to smaller apartments such as one-bedroom, studio and condos to attract people in need of smaller accommodation. This innovation by landlords, according to experts, has caught the attention of working-class singles who want to live very close to their workplaces.

Experts’ view

Taking a look at what 2018 holds for the sector, experts, which comprised developers, institutional investors, mortgage providers, media practitioners, property consultants and brokers at Fine and Country West Africa’s investors series, agreed that the outlook was bright and promising for real estate, hinging their prediction on improved economic climate. According to them, the economy has started looking up with pockets of opportunities emerging in the residential segment of the market.

They observed that low to middle income market remained strong all through the recession period while the upper market struggled. “But developers are adopting creative ways of dealing with the persisting challenge with a view to stimulating demand and sustaining their business,” they said.

Setting the pace, Sales Consultant, Fine and Country in Lagos, Mr. David Mba, said that he saw a more vibrant residential market coming as a result of an improved economy in 2018, adding that what were considered challenges in the past have become opportunities. According to him, developers in their bid to share risk and also raise more capital were going into joint ventures, citing Brains and Hammers Limited’s example.

“Only recently, Brains and Hammers Limited, one of Nigeria’s leading real estate and infrastructure development companies, entered into a joint venture agreement with Lagos State Government,” he said. This move, he explained, is believed to be the company’s response to pressing demands from its clients who wanted to acquire property in Lagos.

He said: “The move will see the company developing 750 housing units, comprising 132-tower units and 618 units that will be part of the Jubilee Estate development in Iganmu area of Lagos.

“The Phase 1 of the project comprises 129 units made up of 12 units of 2-bedrooms, 24 units of 4-bedrooms terrace and 93 other units. There are also twin towers made up of 132 units, comprising 60 units of one bedroom, 24 units of two bedroom, and 24 units of 3-bedroom maisonette.”

Other market trends, Mba said, included increase in demand for good value three or four bedroom apartments in Ikoyi precincts, selling within the range of N120 million to N150 million; increase in demand for houses including terraces, semi and fully detached units. Publisher/CEO, BusinessDay, Frank Aigbogun, is of the view that improvement in the economy means increased business activities that will in turn trigger more demand for real estate products such as commercial office, retail and residential buildings.

Fine & Country’s CEO/Vice Chair, Udo Okonjo, stated that the sector’s positive outlook would come with opportunities for only investors who are ready to understand that the market had changed.

From market survey, she stated that there would be opportunities across various segments of the real estate’s market including residential, commercial office and retail. “Lifestyle communities are the new face of residential real estate.

These communities have the advantages of economies of scale and security,” the Fine and Country’s CEO said. She hinted that opportunity currently existed in millennial and student housing, adding that many investors were tapping into these areas.

Dean, Faculty of Environmental Sciences, University of Lagos, Professor Timothy Nubi, confirmed that many investors had already taken position around the university campus and were delivering one-bedroom self-contained apartments for N500,000 per annum.

In a bid to maximise the value of their property, a recent Northcourt Real Estate report 2018 outlook, noted that land owners looked more favourable to joint ventures with developers.

This newspaper also discovered that many developers and investors have been taking advantage of the ongoing construction of Dangote Refinery in Ibeju-Lekki, Lagos to acquire more lands in the axis for housing estate development.

Last line

As the business investment climate gets betters, necessary actions must be taken by the government to improve ease of doing business in the country.

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