• Feature
• Finance

5 Government Intervention Funds for SMEs in Nigeria You Should Know About

by Samuel Moore

August 21, 2020 7

There are two major ways businesses get funding, equity and loans. The Federal Government of Nigeria has made efforts to create a favourable climate for SMEs in Nigeria. It is doing this through several Government SME intervention funds.

From Federal Government loans for small businesses in Nigeria to CBN intervention funds, the government has set several measures in place. The problem is that most SME owners don’t have an idea that these means of funding exist.

We shed some light by sharing a list of intervention funds in Nigeria you should know. Grab a pen and your jotter and let’s get started.

List of Intervention Funds in Nigeria

Bank of Industry Intervention Funds

The BOI is the largest, oldest, and most successful development financing institution in Nigeria. It used to be known as the Nigerian Industrial Development Bank until 2001. This institution has one aim, to provide business and financial support services to Nigerian enterprises. The ultimate goal is to see a transformation of the Nigerian industrial sector.

As a result, there are several intervention funds under the Bank of Industry. Examples include:

a.      N235 BILLION CBN INTERVENTION FUND FOR MANUFACTURING RE-FINANCING AND RESTRUCTURING FACILITIES OF BANKS’ LOANS.

b.      N300 BILLION CBN POWER AND AIRLINE INTERVENTION FUND (PAIF)

c.       FGN SPECIAL INTERVENTION FUND FOR MSMEs (National Enterprise Development Program)

To learn more about the other intervention funds from the BOI, click here. You can also apply for the several loans available.

Agric Small Medium Enterprise Investment Scheme (AGSMEIS)

The AGSMEIS initiative is one of the many Federal Government Intervention efforts to promote agri-businesses in the country. It also provides support to other SMEs to facilitate employment generation and sustainable economic development.

SMEs can apply for up to N10 million at a rate of 5% per annum. Some of the objectives of this scheme include:

a.      Provide finance to Nigerian SMEs.

b.      Generate employment opportunities for Nigerian youth.

c.       Facilitate sustainable agricultural practices and develop an efficient agricultural value chain.

d.      Boost managerial capacity in SMEs and Agri-businesses so that they can grow to become huge organizations.

Some of the sectors the AGSMEIS caters to include:

a.      Agriculture

b.      Health

c.       ICT

d.      Creative industry

e.      Production and manufacturing

f.        Services (restaurants, hospitality, etc.)

Want to learn more about the AGSMEIS or apply for the loan? Click here.

Development Bank of Nigeria Loans

This is another if the Government SME intervention funds that so many SME owners in Nigeria don’t know about. The DBN exists for one purpose, to alleviate the financing constraints that micro, small, and medium scale enterprises face in Nigeria.

The bank was established by the Federal Government of Nigeria in conjunction with other global partners. Some of these include the African Development Bank and the World Bank. So far, it has 27 PFIs onboard, has helped 95,000 MSMEs, and has disbursed N151,000,000,000.

To qualify for a DBN loan, you must meet these criteria:

a.      Be involved in productive enterprises.

b.      Must be a customer of a certified financial institution.

The loans are to be accessed through the PFIs so you must apply through your bank. PFIs include commercial banks, development finance institutions, and microfinance banks. The loan tenor is up to 10 years and there is a moratorium period of 18 months.

Here’s how to apply for a DBN loan:

a.      Visit your PFI (any of the ones we stated above) to indicate your interest in the loan.

b.      The PFI assesses your application to see whether it is favorable or not. If it is, the bank forwards your application to the DBN on your behalf.

c.       If the loan is approved, the funds are disbursed to the PFI who in turn disburses them to you.

To get a list of the eligible PFIs and their contacts, click here.

Micro, Small and Medium Enterprises Development Fund

This is one of the CBN intervention funds launched with a share capital of N220 billion on August 15, 2013. The Apex bank established this fund after recognizing the immense contributions of MSMEs to the Nigerian economy. It was clear that there was still a huge financial gap that needed to be closed.

So far, ten percent of this fund has been dedicated to developmental objectives including capacity building, grants, and administrative costs. The remaining ninety percent is being released to PFIs for on-lending to MSMEs at 9% per annum.

These are some of the objectives of the MSMEDF:

a.      Enhance access to financial services.

b.      Engender inclusive growth.

c.       Create wealth and increase employment.

d.      Increase productivity of microenterprises and their output.

Eligible activities include:

a.      Micro Enterprises.

b.      SMEs in the following sectors:

§  Agriculture

§  Artisans

§  Cottage industries

§  Trade and general commerce

§  Services

§  Other economic activities prescribed by the CBN.

You can approach your bank to apply for the MSMEDF loan.

CBN Creative Industry Fund

This is another Federal Government Loan 2020 that you can access through the CBN. The Apex bank developed the Creative Industry Financing Initiative in conjunction with the Banker’s Committee. This intervention fund is targeted at helping youth in the following sectors:

a.      Fashion

b.      Movie

c.       Information technology

d.      Music

You can get up to:

a.      N500 million for movie distribution.

b.      N30 for movie production.

c.       N3 million for software engineering.

d.      Rental and service fees for IT and fashion businesses.

e.      Training, equipment, rental, and service needs for music businesses.

The loan tenor for the different loans is as follows:

a.      Movie distribution and production is a maximum of 10 years.

b.      Software engineering is a maximum of 3 years.

c.       Music, IT, and fashion is a maximum of 10 years.

You can apply for this loan through your bank. To learn more about the CBN Creative Industry Fund, click here.

Conclusion

These are just a few of the Government SME intervention funds that you can access in Nigeria. Of course, you are likely to encounter a few challenges during the application process. We suggest that you speak to your account manager at the bank to help you out.