|BACKGROUND||In line with global best practices, the Bank recently engaged in knowledge exchange with 3 major Development Finance Institution (DFIs) in the diaspora namely; KfW- Germany, BNDES- Brazil and SMERAN- India. The outcome of this is the need to engage the MSME friendly commercial banks as a vehicle for reaching out to the critical mass of the target MSME market through an on-lending credit window as it is the practice in more developed economies.|
|TARGET MARKET||Ø MSMEs-friendly Banks that satisfy minimum requirements for Capital Adequacy, Asset Quality, Strong Management, good Earning and Liquidity (CAMEL) rating as defined by BOI and within CBN stipulated indices.|
|PROJECTED IMPACT||The fund shall be deployed for the financing of eligible customers of MSMEs and LEs within the Commercial banks portfolio; requiring financing for projects within the BOI’s developmental mandate. Projects must be located in the areas with comparative advantages in terms of the available raw materials and moderate production cost as well as operating cost. This is expected to reach about 1,000 customers and create a minimum of 5,000 direct and 15,000 indirect jobs for Nigerians: total (20,000).|
|PROGRAM LIMIT||Global fund availability is N50.0 billion|
|SINGLE OBLIGOR LIMIT||
|APPROVAL LIMIT||In line with BOI internal approval limit|
|LOAN TYPE||To be availed as:
Maximum of N50m per obligor (PB takes full credit risk):
Long Term Loan (all in rate of 9% per annum i.e)
· BOI On-lending 4% per annum.
· Commercial Bank Max spread of 5% per annum
Working Capital (all in rate of 11% per annum i.e)
· BOI On-lending 5% per annum.
· Commercial Bank Max spread of 6% per annum
Co-financing (Risk to be shared equally):
Long Term Loan (all in rate of 9% per annum i.e.)
· BOI 4.5% per annum.
· Commercial Bank 4.5% per annum
Working Capital (all in rate of 11% per annum i.e.)
· BOI 5.5% per annum.
· Commercial Bank 5.5% per annum
|MORATORIUM||Long Term Loan
· 6 months – from date of loan disbursement for MSME and 12 months -from date of loan disbursement for Large Enterprise (LE)
· 3 months – from date of loan disbursement
|TENOR||Long Term Loan
· 36 months for MSME inclusive of 6 months moratorium period
· 60 Months for Large Enterprise (LE) customers inclusive of 12 months moratorium period
· The tenor of the working capital shall be a maximum of 12 months renewable yearly.
|COLLATERAL/ SUPPORT||Collaterals to be provided to the extent of the risk being taken
1. ISPO from PB subject to CBN confirmation.
2. Treasury Bills/ Government Bonds
3. All assets Debenture/Legal mortgage (for Risk shared on pari-passu basis for co-financing)
|DISBURSEMENT||To the participating commercial bank(PB)|
|REPAYMENT SOURCE||From the participating Commercial bank(PB)|
|REPAYMENT MODE||Monthly by direct credit to BOI account by the participating commercial bank; which must be remitted to BOI within 24 hours. In the event of default, the MSME-friendly bank must notify BOI within 24 hours to trigger prompt remedial action by the Bank.|