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The Federal Government and Dangote Foundation at the
weekend floated a business and development fund to help provide soft
loans at single digits interest rates to micro, small and medium scale
entrepreneurs in the country.

The Bank of Industry (BoI), on behalf of the Federal
Government, would contribute N2.5bn into the fund, just as Dangote
Foundation , with a pledge to both increase their contribution in
future, to help realize the objective of the National Economic Growth
Strategy. The strategy is designed to enhance economic growth, sustain
macro-economic stability, diversify the country’s economic base by
creating the environment for inclusive growth as well as facilitate job
creation by removing barriers to increased productivity and create up
to about 1.5 million new jobs.

Minister of Finance, Olusegun Aganga, told reporters
in Abuja that the Fund would provide term and working capital loans,
leasing of industrial/business equipment as well as trading and allied
businesses, which would be accessed at the overall interest rate of 5
percent, though, adding that Dangote’s contribution is a grant that
does not attract any interest charge.

Describing the Fund as a good example of how the
private and public sectors could collaborate to create the environment
for Small and Medium Enterprises (SMEs) to thrive and create jobs, the
Minister explained that the BOI’s contribution is about 10 percent,
while that of Dangote Foundation is an interest-free grant targeted at
the labour intensive sectors of the economy. The sectors to benefit
from the fund include agriculture, which currently accounts for more
than 40 percent of gross domestic product (GDP), while 60 percent would
go for the creation of employment in the manufacturing and building as
well as construction. “The initiative is complementary to government
strategy for financial inclusion and enterprise development targeted at
Small and Growing Businesses (SGBs) in critical sectors of the economy,
such as food processing, tourism, building & construction, ICT and
entertainment,” he said.

Apart from providing the capital, the BOI is also
working with the Lagos Business School (LBS), Small and Medium
Enterprises Development Agency of Nigeria (SMEDAN) and other 22
enterprise development centres in the country to help train over 1,000
businesses and help develop their business ideas into bankable plans.

Guidelines for loan

20 industrial clusters are to be developed at
different locations across the country and provided with $500 million
seed debt capital at single digit interest rate channelled through BOI
and Nigerian Export-Import (NEXIM) Bank specifically for SGBs. The
collaboration with the BOI and the LBS, the Minister explained,
followed findings from banks that the high rate failure among SGBs was
as a result of high cost of running the businesses, apart from the
notion that banks were not interested in lending to such businesses due
to the dearth of bankable and profitable business plans as well as
collateral. Meanwhile, the BOI and NEXIM Bank have released the
guidelines for accessing the $200 million fund by the Federal
Government dedicated to the entertainment sector. Already, it gathered
that several applications have already been received from prospective
beneficiaries of the loan under the Growth and Employment Programme
(GEP), while arrangements are at advanced stage to establish a
strategic advisory board for the entertainment sector to develop
strategic framework and roadmap for the sustainable development of the
industry.

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