CBN, Banks Working Out Framework For N26bn Agric, SMEs Equity Fund  

By Nse Anthony-Uko

(Sundiata Finance) – The Central Bank of Nigeria (CBN) in collaboration with the Bankers Committee, is working on the framework for the N26 billion so far contributed by lenders for equity investment in agriculture and Small and Medium Enterprises (SMEs) called the AGSME fund.

The Bankers Committee had agreed at the annual bankers committee meeting last year, to support in a  sustainable manner, the agro industries and SMEs with 5 per cent of Deposit Money Banks’ profit after tax, contributed to a fund in the CBN, as equity for the agriculture and SME sub-sector of the economy.

The AGSME Fund is a long term capital required to catalyse growth in SMEs and make them more viable and sustainable. The objective is to catalyse growth in SMEs to ease access to finance, to build capacity, to create jobs, and ultimately to grow prosperity.

Giving the update on Thursday after the Bankers Committee meeting in Lagos, Bola Adesola, managing director/ CEO, Standard Chartered Bank, said “after the audited accounts of banks were published, we all contributed five per cent of our profit after tax to a fund in the CBN, towards contributing equity in agriculture and SMEs.

“Right now, there is N26 billion in the fund. We are working on the framework for the investment. We are looking at partnership; we are looking at co-investors in private equity funds as well. The economic development sub-committee of the CBN is working with the Development Bank, in this regard”.

Adesola said the Committee would not wait until it finalises the framework but will start investing, once customers meet the eligibility criteria. “We also want to ensure that we have the right governance around the equity fund. It is our contribution to economic growth and prosperity”, Adesola added.

Others who addressed the media included Ahmed Abdullahi, banking supervision, CBN, Demola Sogunle, chief executive officer of Stanbi IBTC Bank, and Isaac Okorafor, acting director, corporate communication, CBN.

Abdullahi said the stability in the foreign exchange market has been welcomed by the Bankers Committee. He was optimistic that the economy would have improved tremendously by  the third  quarter of the year.

He said although the economy is still in the negative, the size of the negative growth has reduced. “It is almost obvious that by the end of  the third quarter, there will be positive growth and there are a number of indices that are pointing toward that. “Inflation is trending downwards. Its about 16.25 per cent from18 per cent that it was.

“The exchange rate has largely stabilised, we are seeing convergence at both the NAFEX – Importer and Exporter window as well as the BDCs’ rate”.

Sogunle, said all members of the committee acknowledged the efforts and measures put in place by the CBN to encourage financial inclusion, adding that efforts were yielding fruit.

Sogunle noted that within six weeks of introducing the investors and exporters window, the forex market has recorded in excess of $2.2 billion in volume of transaction at the window, which he described as quite impressive.

He said that liquidity is gradually coming into that market, adding that the CBN contributed only 30 percent of the total transaction, while investors and exporters play actively in the market.

“We have seen convergence between NAFEX and that of  the parallel market, which means confidence is returning, price visibility is returning”, Sogunle said.

Okorafor said the CBN would ensure it sustains intervention to support the naira and that the CBN was comfortable with its external reserve level of $30.2 billion.

Regarding the call by the Senate to ensure that interest rates come down, Okorafor said the committee is working to ensure the de-risking of the SMEs and agric sector by way of risk sharing.

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