The Central Bank of Nigeria (CBN) has inaugurated a committee to facilitate the disbursement of the N26 billion equity fund meant for the growth of agriculture and small businesses.
The committee was inaugurated on Thursday at the end of the 331st meeting of the Bankers Committee held at the headquarters of the CBN in Abuja.
The committee in February this year agreed to set up the fund where banks would transfer five per cent of their profits after tax to finance the agricultural sector as well as non-oil exports.
Based on the balance sheet size of the banking sector, about N26 billion has been pooled into the fund.
The decision to set aside the fund was to support the agricultural sector and import substitution policy of the Federal Government.
Details about the fund show that it will be used to finance eligible bankable projects that are meant to support export drive of all import substitution products.
The money is also expected to be given out to businesses as loans but will be provided by banks as equity contribution to such companies.
This, it was learnt, would allow the banks to have equity stake in such businesses for a maximum of 10 years.
In addition, rather than charging interest, the banks would be entitled to dividend during the period of their investments.
Addressing journalists shortly after the meeting, the Director, Banking Supervision, CBN, Mr. Ahmed Abdullahi, said the committee had set aside a pool fund of N26bn for the equity fund that would support the Small and Medium Enterprises in the country.
The briefing was attended by the Managing Director, Union Bank Plc, Mr. Emeka Emuwa; Managing Director, FSDH Merchant Bank, Mrs. Hamda Ambar; and Executive Director, Standard Chartered Bank, Mrs. Mobola Faloye.
Abdullahi noted that the fund would be increased subsequently as entrepreneurs came up for equity funding; and more funds would be accrued as banks got their annual statements of account approved.
He named members of the board to include the managing directors of Guarantee Trust Bank, Zenith Bank, Access Bank, UBA, First Bank , and the directors of banking supervision and development finance of the CBN.
He said, “If you recall all the banks are supposed to set aside a portion of their profit, which will be made available for equity investment in agriculture and the Small and Medium-scale Enterprises.
“So, the board was inaugurated today as well as the Project Review Committee of that fund. Basically, the fund is ready to start implementing.”
He said the committee noted a turnaround in the economy and there was a strong belief that the second quarter had seen the economy emerging out of recession.
He said that although the figures had yet to be released by the National Bureau of Statistics, the non-oil sector of the economy believed to drive the economy witnessed strong positive growth.
Abdullahi said, “If you look at the confidence of the economy, the stability in the capital and foreign exchange market, you will know that progress has been made in getting the economy out of recession.
“This is a good development as it is going to have an elaborate effect on the banking system as well as other sectors of the economy. And so, the Bankers Committee generally expresses its delight at this development.”