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CBN allocates 6.63% of N10.39trn loans to MSMEs in 10 years

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By Sodiq Adelakun

A report from the Central Bank of Nigeria (CBN) has revealed that over the course of ten years, only 6.63 percent of the total N10.39 trillion loans disbursed to various sectors were allocated to intervention programs supporting Micro, Small, and Medium Enterprises (MSMEs).

According to the detailed report, a total of N689 billion was earmarked for the MSME sector between August 2013 and September 2023. However, this allocation places the MSME sector third in terms of the least funding within the intervention programs, trailing behind the export sector with a mere 2 percent allocation and the health sector, which received only 1 percent of the total intervention funds.

The intervention programs encompass initiatives such as the Micro, Small, and Medium Enterprises Development Fund (MSMEDF), Agri-business/SME Investment Scheme (AgSMEIS), Nigeria Youth Investment Fund (NYIF), and Tertiary Institutions Entrepreneurship Scheme (TIES), among others.

Despite the relatively low allocation, the report indicates positive performance indicators within the MSME sector. The majority of credit facilities allocated to MSMEs have either been fully repaid or are currently in ongoing payment status for the projects, suggesting a commendable level of financial discipline and project viability within the sector.

Top Five Beneficiaries of the loan programmes for MSME sector

Data from the Central Bank of Nigeria (CBN) indicates that a minimum of eight loan programs were specifically aimed at key players in the MSME sector. Below are the programmes:

Micro, Small and Medium Enterprises Development Fund (MSMEDF): According to data provided by the Central Bank of Nigeria (CBN), these loans were financed by the CBN in conjunction with Private Finance Initiatives (PFI) to bolster MSMEs in sectors like manufacturing, pharmaceuticals, and cement companies.

Agri-business/SME Investment Scheme (AgSMEIS): The AgSMEIS loan was funded by the CBN and annual 5 percent PAT contribution of DMBs. The top beneficiaries include the manufacturing sector, fashion, agriculture and hospitality.

Targeted Credit Facility (TCF): The Targeted Credit Facility (TCF) was an initiative financed by the CBN as a stimulus package to cushion the effects of the COVID-19 pandemic on households and SMEs.

Creative Industry Financing Initiative (CIFI): The Creative Industry Financing Initiative (CIFI) is a loan facility targeted at the creative industry of the country. The loans, disbursed by the CBN, were allocated through private finance initiatives (PFI) to improve access to low-cost financing to entrepreneurs and investors in the Nigerian creative and information technology (IT) sub-sectors.

Nigeria Youth Investment Fund (NYIF): The Nigeria Youth Investment Fund (NYIF) was one of the top beneficiaries of the intervention programmes by the CBN.

According to the report, the credit facility was given to ameliorate youth unemployment challenge in Nigeria by channeling finance to youth and youth-owned enterprises. The report also noted that the initiative helped create 11,106 direct and indirect jobs across the six geopolitical zones.

Micro, Small, and Medium Enterprises (MSMEs) in Nigeria continue to face significant hurdles in accessing funding, despite the fact that 88 percent of the country’s employment rate comprises self-employed individuals, primarily working in the informal sector, according to the National Bureau of Statistics (NBS).

This trend not only underscores the pervasive entrepreneurial culture among Nigerians but also underscores the urgent need for targeted support and policies to nurture and sustain the self-employed sector, which holds considerable influence over the nation’s economy.

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UBA will meet N500bn capital base before deadline – CFO

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The Executive Director of Finance and Risk Management for United Bank for Africa, Ugochukwu Nwaghodoh, has said that the banking group would meet the new capital requirement before the March 2026 deadline given by the Central Bank of Nigeria.

He stated this during the week at the 75th International Global Media Conference held at the bank’s headquarters in Lagos.

He said, “The central bank has said that every bank must have N500bn in pure share capital and that was not necessarily related to the existing shareholder funds. Obviously, it will strengthen the banking system and the banks in Nigeria will be able to do a lot more in terms of the economy.

“The central bank gave recommendations on how to achieve this, either by raising additional funds, mergers and acquisitions and you can choose not to raise more funds and step down your license to the level where your current capital can support.

“For UBA, we operate with the highest license around, which is an international licence. We have very strong, virile operations across Africa and centres across the world. We are maintaining this route and we are looking at options. We have engaged financial advisers, and we indeed have set in motion the process to get the requisite approval from shareholders.”

According to Nwaghodoh, the firm will on Friday get the approval of shareholders to enable it raise fresh fund.

“We note, however, that we are committed to achieving this well ahead of the deadline,” he added.

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DMO raises N4.9trn for Ways and Means, says domestic market major source of funding for FG

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The Debt Management Office (DMO) has, again, sought the support of primary dealer market makers (PDMM) to raise more financing for Nigeria’s domestic debt plan.

The DMO has an outstanding N1.5 trillion to raise from the Federal Government’s proposed N6 trillion bond having already raked in N4.5 trillion from previous issuances.

The director-general of the Debt Management Office (DMO), Patience Oniha, who led a team from the debt office for a meeting with the primary dealer market makers in Lagos on Monday, noted that the DMO had raised part of the finance for both the domestic debt and ways and means borrowing, which they intended to complete.

“We had a meeting earlier in the year where we talked about the DMO’s borrowing plan, which is the FGN’s borrowing plan, and we told you what we were doing from the budget because that’s the principal document for refinancing.

“Then, we discussed the Ways and Means borrowing and how to put that in order. At that time, the budget had N6 trillion of domestic borrowing, new borrowing, not refinancing. And then the ways and means at that time, there was N7.3 trillion that the National Assembly approved for securitisation,” she said.

“We’re happy that with your support for the new domestic borrowing in the 2024 budget, which was N6 trillion, we raised N4.5 trillion. So it’s not our money, you gave us money and we’d like to thank you.”

“For the ways and means, out of that N7.3 trillion that the National Assembly approved for securitisation, we have raised N4.905 trillion. So, there’s still a balance in both cases, but let’s see how the rest of the year goes,” Oniha stated.

At the April bond auction, the DMO offered N450 billion across three bonds: the April 2029 bond (Reopening, 5-year), the February 2031 bond (Reopening, 7-year), and the May 2033 bond (New, 9-year reopening).

“Although subscriptions totalled N551.33 billion, this was relatively low compared to previous months but still 22.52 percent higher than the offer. The subscription distribution was N100.57 billion for the 2029 bond, N76.88 billion for the 2031 bond, and N373.88 billion for the 2033 bond.

“Ultimately, the DMO sold N380.77 billion, 15.38 percent less than the total subscriptions. The stop rates decreased to 19.29 percent, 19.74 percent, and 19.89 percen, compared to 19.30 percent, 19.75 percent, and 20 percent in the previous auction,” Futureview Research analysts said in their May 20 note to investors.

Also at the meeting, Nadia Zakari, president of Financial Market Dealers Association, stated that their interactions with the DMO have been critical in making decisions that shape the country in the long term.

“As market operators, we act as financial intermediaries who interact with other market operators, investors, and their clients. I think it’s because of the size and importance of these interactive sections, that our business environment is ever-evolving, and constantly changing.

“These constant engagements are crucial as some of the interactions we’ve had as highlighted by the director-general have been critical in making decisions as we strategically plan for the rest of the year,” she stated.

United Capital research analysts said in their May 20 note, “This week, we expect mixed interest in FGN Bonds. The overall direction of the market will be dependent on the outcome of the MPC meeting.”

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JAIZ Bank grows profit by 67%

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Jaiz Bank Plc grew its profit before tax by 67 percent to N11.1bn in 2023.

The bank disclosed this in a statement on Monday as it filed its 2023 audited results on the Nigeria Exchange Limited portal.

Jaiz Bank is a pioneering non-interest bank in Nigeria, providing ethical services to individuals, and corporate and government entities since 2012.

The bank improved gross earnings by 42 percent to N47.2bn from N33.2bn in 2022

The bank identified several variables, including corporate and retail Murabaha profit and net revenue from e-business, as contributing to its rise.

The board of directors of the bank proposed a dividend of four Kobo per unit, subject to shareholders’ approval.

Its balance sheet rose to N580bn from N12bn in the prior year, driven by financing and investment assets also grew from about N30bn to N357bn in 2023.

Meanwhile, Jaiz Bank has projected a profit after tax of N4.91bn in the second quarter of 2024, while eyeing N19.32bn as gross earnings.

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