AGSMEIS: CBN expands beneficiaries to 14,638

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The Central Bank of Nigeria has extended the number of beneficiaries under the Agri-Business Small and Medium Enterprise Investment Scheme (AGSMEIS) Loans to 14,638 applicants.

This information is contained in a communique from the last MPC report of CBN verified by Aiaccess Contractors. The communique also revealed that 250 SME businesses, predominantly the youths, have also benefited from the Creative Industry Financing Initiative.

In addition to these initiatives, the CBN is set to contribute over N1.8 trillion of the total sum of N2.30 trillion needed for the Federal Government’s 1-year Economic Sustainability Plan (ESP), through its various financing interventions using the channels of Participating Financial Institutions (PFIs).

Backstory

A few months ago, the CBN announced that it has unveiled a framework that will integrate a non-interest window in all its intervention programmes aimed at supporting businesses and households that have been impacted negatively by the COVID-19 pandemic. Aiaccess Contractors had earlier reported on how to access the AGSMEIS fund.

Why it matters

Given the impact and accompanying harsh consequences of the pandemic, coupled with the present regime’s focus on diversification of the economy, this intervention is therefore aimed at achieving the diversification goal, reflating the economy, creating more jobs and income, managing inflation, and setting the economy on the path of recovery.

CBN in the latest communique of its last MPC meetings also revealed that it has disbursed a total of N3.5 trillion in interventions in the wake of the COVID-19 pandemic as of September 22, 2020. The breakdown of the disbursement includes:

  • Real Sector Funds: N216.87 billion
  • Targeted Credit Facility: N73.69 billion
  • AGSMEIS: N54.66 billion
  • Pharmaceutical and Health Care Support Fund: N44.47 billion
  • Creative Industry Financing Initiative: N2.93 billion

In terms of project distribution, a total of 128 projects that comprises 87 real sector funds project and 41 health-related projects have been funded. In like manner, about 120,074 have received funding under the Targeted Credit Facility.

 

How to access new CBN’s Agric fund

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The Central Bank of Nigeria (CBN) has unveiled guidelines for a Non-Interest Financial Institutions under its Agri-Business, Small and Medium Enterprise Investment Scheme (AGSMEIS) and Micro, Small and Medium Enterprises Development Fund (MSMEDF).

This was disclosed by the apex bank via its website on Tuesday. The guidelines also included the Accelerated Agricultural Development Scheme (AADS) and seven other intervention schemes in its bouquet.

The Central Bank of Nigeria (CBN) has unveiled guidelines for a Non-Interest Financial Institutions under its Agri-Business, Small and Medium Enterprise Investment Scheme (AGSMEIS) and Micro, Small and Medium Enterprises Development Fund (MSMEDF).

This was disclosed by the apex bank via its website on Tuesday. The guidelines also included the Accelerated Agricultural Development Scheme (AADS) and seven other intervention schemes in its bouquet.

How the AGSMEIS works

* The CBN would create a Fund to be known as ‘AGSMEIS Non-Interest Fund’ that will be domiciled in a dedicated account with the apex bank.

* Each non-interest deposit Bank (full-fledged or window) was to set aside 5% of its Profit After Tax (PAT) annually as contribution to the Fund.

* Each non-interest Deposit Bank was also to transfer its contribution to the CBN not later than 10 working days after the Annual General Meeting (AGM) of the participating bank.

* Eligible activities under the Scheme are businesses across the agricultural value chain, covering production, inputs supply, storage, processing, logistics and marketing.

* Others included MSMEs in the real sector including manufacturing, ICT, mining, petrochemicals and the creative industry as well as other activities as the CBN may determine from time to time.

How to access fund

The application of the Fund shall be categorised into three broad components. They are debt, equity and developmental components.

•  The debt component shall constitute 50% of the fund which shall be disbursed as financings to eligible businesses through Non-Interest Deposit Money Banks.

*Asset purchased shall be registered with the National Collateral Registry (NCR).

* Financing limit: N10,000,000

* Mark-up: 5% per annum

* Tenor: Up to 7 years (depending on the nature/gestation period of the
project)

* Moratorium: Maximum of 18 months for principal and 6 months on mark-up.

* Duly completed application form.

* Bank Verification Number (BVN).

* Certificate of Training from recognised Entrepreneurship Development Institution (EDI) or evidence of membership of organised private sector association.

* Letter of Introduction from any of the following: Clergy, Village Head, District Head, Traditional Ruler, senior civil servant etc (for individuals, microenterprises only).

* Evidence of registration of business name or certificate of incorporation and filing of annual returns (where applicable) in compliance with the provisions of the Companies and Allied Matters Act (1990).

Back story

Some month back, the CBN announced that it has unveiled a framework that will integrate a non-interest window in all its intervention programmes aimed at supporting businesses and households that have been impacted negatively by the COVID-19 pandemic.

In a statement, the apex bank said the integration will focus mainly on its Anchor Borrowers’ Programme (ABP) as well as the Targeted Credit Facility (TCF).

Why it matters: The Scheme will be for start-ups, business expansion or revival of ailing companies and shall be in compliance with provisions of BOFIA (1991) as amended and the principles underpinning operations of NIFIs.

“The MSMEDF for NIFIs guidelines are aimed to channel low return funds to the MSME sub-sector of the Nigerian economy through participating Financial Institutions (PFIs) to enhance access by MSMEs to financial services.

“Similarly, the non-interest guidelines for the AADS are aimed at engaging a minimum of 370,000 youths in agricultural production across the country between now and 2023, in order to reduce unemployment among the youth in the country,” it added.

While the specific objectives of the MSMEDF for NIFIs are to increase the productivity and output of microenterprises, job creation and engender inclusive growth, those of the AADS are to increase agricultural production towards food security, job creation and economic diversification.

How to register NAFDAC regulated Products

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The following are required from the Applicants

  1. Submit all documents for registration and application letter in accordance with the issued guidelines at first instance for any of the service to be rendered by NAFDAC.
  2. Provide NAFDAC with the relevant information and description of the facility for inspection where it relates to registration and importation of NAFDAC regulated products.
  3. Provide samples of the products to be registered when notified by NAFDAC for laboratory analysis.
  4. Ensure all payments are made as at when due (See relevant guidelines and tariffs and fees).
  5. Ensure all documents are complete and with the appropriate description to prevent unnecessary delays.

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Timelines

  1. Registration of food product not more than 90 days from acceptance of application.
  2. Registration of drug product not more than 120 days from acceptance of application.
  3. Variation of product registration takes not more than 60 days

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Compliance Directive

A client is mandated to comply with Compliance Directive (CD) within 7 days of issuance.

Note failure to comply with any CD issued by NAFDAC may be a basis for cancellation of the application and all delays of the client will not be counted within the 90 days for registration.

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Complaints:

All Complaints or conflicts should be forwarded to the reforms unit of NAFDAC through the following address; nafdac@nafdac.gov.ng, complaints@nafdac.gov.ng, or the nearest nafdac state offices (see attached details).

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Summary of Registration processes with timelines

  1. Submission of Application – 0 days
  2. Document Verification – 10 days
  3. Facility Inspection/Sampling – 10 days for Food, 20 days for Drugs
  4. Laboratory Analysis – 30 days for Food, 40 days for Drugs
  5. Final Vetting – 10 days
  6. Approval Meeting/Issuance of NAFDAC registration Number(Certificate of registration) – 20 days

Total number of days: 90 days for Food, 120 days for Drugs

Useful Resources

PROCEDURE FOR FINANCE COMPANY LICENSE IN NIGERIA

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INTRODUCTION

The Central Bank of Nigeria according to the powers conferred on it by Section 28 of the Central Bank of Nigeria Act and Section 56-61 of the Bank and Other Financial Institutions Act, issued revised guidelines to regulate the establishment, operations, and other activities of Finance Companies in 2014.

FINANCE COMPANY

A finance company, unless otherwise stated, means a person or company licensed to carry on finance company business. Finance Company Business means the business of providing financial services for consumers and to industrial, commercial, or agricultural enterprises. Such services include:

1.      Funds management;

2.      Equipment leasing;

3.      Hire-purchase;

4.      Debts factoring and securitization;

5.      Project financing or consultancy;

6.      Debt administration;

7.      LPO financing;

8.      Project financing;

9.      Export financing;

10.     Financial consultancy; and

11.     Issuing of vouchers, coupons, credit cards, and token stamps and such other businesses as the CBN may, from time to time, designate.

PROCEDURE FOR APPLICATION FOR LICENCE

Any person seeking a licence for a finance company business in Nigeria shall apply in writing to the Governor of the Central Bank of Nigeria. Such application shall be accompanied by the following:

1.      A non-refundable application fee of N10,000.00 [ten thousand Naira only] in bank draft, payable to the Central Bank of Nigeria.

2.      Deposit of the minimum capital of N20 million (Twenty million naira only) in bank draft made payable to the CBN. The capital thus deposited together with the accrued interest will be released to the promoters on the grant of the final licence.

3.      Satisfactory, verifiable, and acceptable evidence of payment by the proposed shareholders of the minimum capital of N20 million.

4.      A copy of a detailed feasibility report disclosing information that will include:

i.       The objectives and aims of the proposed finance company.

ii.      The need for the services of the finance company.

iii.     The special services that the finance company intends to provide.

iv.      The branch expansion programme [if any] within the first five years.

v.      The proposed training programme for staff and management succession.

vi.      A five-year financial projection for the operation of the finance company, indicating its expected growth and profitability.

vii.     Details of the assumptions upon which the financial projection has been made.

viii.    The organizational structure of the finance company, setting out in detail, the functions and responsibilities of the top management team.

ix.      The composition of the Board of Directors and the curriculum vitae of each member including other directorships held [if any].

x.      The conclusions based on the assumptions made in the feasibility report.

5.      A copy of the draft Memorandum and Articles of Association.

6.      A letter of intent to subscribe to the finance company, signed by each subscriber.

7.      A copy of the list of proposed shareholders in tabular form, showing their business and residential addresses [not post office addresses], and the names and addresses of their bankers.

8.      Names and curriculum vitae (CV) of the proposed members of the Board of directors. The Cvs must be personally signed and dated. The documents/items under paragraph (d) above.

9.      No proposed finance company shall incorporate/register its name with the Corporate Affairs Commission until written approval has been communicated to the promoters by the CBN, a copy of which shall be presented to the Corporate Affairs Commission.

10.     In considering an application for a licence, the Bank shall require to be satisfied as to the following;

  • The Minimum paid-up capital of N20 million is acceptable and the source is verifiable, satisfactory, and acceptable.
  • The quality of the management of the proposed company. The promoters would be required to submit the names and curriculum vita (cv) of the proposed top management team. The CVs must be personally signed and dated.
  • The earnings prospect of the company.
  • The objects of the company as disclosed in its Memorandum and Articles of Association which should agree with the services listed in the provisions of Section 1 of these Revised Guidelines.

11.     Thereafter, the Governor may grant a licence to a finance company.

12.     The CBN may at any time vary or revoke any conditions of a licence or impose additional conditions.

13.     Where a licence is granted subject to conditions, the finance company shall comply with those conditions to the satisfaction of the CBN within such a period as the CBN may deem appropriate in the circumstances.

REQUIREMENTS FOR DIRECTORS

1.      The maximum number of directors on the Board of a finance company shall be seven while the minimum shall be three. To qualify for the position of a director in a finance company, it is hereby required that the person(s) must not be current employees or directors of banks or other financial institutions, except the finance company is promoted by the banks or other financial institutions and are representing the interest of such institutions. In circumstances, however, where current directors or employees of banks or Other financial institutions are proposed for the position of Director, the consent of their employers must be given in writing to the CBN.

2.      The appointment of new directors must be preceded by CBN’s approval.

MANAGEMENT REQUIREMENTS

The following minimum qualifications and experience are mandatory for officers who may occupy the key/top management positions in the finance company.

1.      Managing Director/Chief Executive – a recognized university degree or professional qualification with at least 7 years of post-qualification experience in relevant fields.

2.      Departmental Head – a recognized university degree or professional qualification with at least 5 years of post-qualification experience in relevant fields.

3.      Support staff – shall be qualified and be of proven ability.

4.      A person with any other qualifications or experience that may be considered adequate by the CBN can hold any of the positions [i], [ii] and [iii] within the organization.

CONDITIONS PRECEDENT TO THE COMMENCEMENT OF OPERATIONS

1.      The promoters of a finance company shall submit the following documents to the CBN before such finance company is permitted to commence operations:

a.       A copy of the shareholders’ register in which the equity interest of each shareholder is properly reflected [together with the original for sighting].

b.      A copy of the share certificate issued to each shareholder.

c.       A certified true copy of Form C02 [Return of Allotments] filed with the Corporate Affairs Commission.

d.      A certified true copy of Form C07 [Particulars of Directors] and written confirmation that the Board of Directors approved by the CBN has been installed.

e.       A certified true copy of the Memorandum and Articles of Association filed with the Corporate Affairs Commission.

f.       The opening statement of affairs audited by an approved firm of accountants practising in Nigeria.

g.      A certified true copy of the certificate of incorporation of the company [together with the original for sighting purposes only].

h.      A copy of each of the letters of offer and acceptance of employment by management staff and a written confirmation that the Management team approved by the CBN has been put in place.

i.       A letter of undertaking to comply with all the rules and regulations guiding the operations of finance companies.

j.       Evidence of registration with the finance company’s association umbrella body.

2.      The finance company shall inform the CBN of the location and address of its Head Office.

3.      The finance company shall be informed in writing by the CBN that it may commence business after physical inspection of its premises.

4.      The finance company shall inform the CBN in writing of the date of commencement of business.

CONCLUSION

To recapitulate, it is compulsory for every company desiring to be licensed as a finance company to be a stand-alone and therefore, be strictly limited to solely engaging in finance company businesses as stated in the body of the article.

DIFFERENCE BETWEEN A PRIVATE AND PUBLIC LIMITED LIABILITY COMPANY

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There are many differences between a private and public limited liability company in Nigeria. Companies, either private or public, are the most widely used business organization in Nigeria.

The Corporate Affairs Commission established by virtue of the Companies and Allied Matters Act 2020 (CAMA or the Act) oversees the incorporation of a company in Nigeria.

The CAMA has now provided that one person can now form or incorporate a private limited liability company in Nigeria.

There are certain advantages that companies enjoy over other types of business organizations. Advantages in this sense are different from the features of the company when compared to other business organizations. Some of them are highlighted below.

  • Perpetual succession: a company once incorporated, enjoys perpetual succession. where the shareholders die, other persons will take over the shares.
  • Limited liability: when it is a company that is either limited by shares or guarantee, the liabilities of its members are limited.
  • Investors for a company: investors invest in a company more than in any sole proprietorship and partnership.
  • Efficient Management: in a company, the management can be different from the actual owners.

By virtue of section 21(1) of CAMA, an incorporated company may be a company with the following;

  • having the liability of its members limited by the memorandum of association to the amount, if any, unpaid on the shares respectively held by them (referred to as company limited by shares) or;
  • having the liability of its members limited by the memorandum of association to such amount as the members may respectively undertake to contribute to the assets of the company in the event of its being wound up (in this Act referred to as a company limited by Guarantee) or;
  • not having any limit on the liability of its members (in this Act referred to as an unlimited company).

A company of any of these types listed above may either be a private company or a public company.

The features of a Private Limited Liability Company

  • By the provision of CAMA, any two or more persons may form and incorporate a company by complying with the requirement of the Act, now with the re-enactment of the Act, one person can now form and incorporate a Private Company in Nigeria.
  • A Private Company restricts the transfer of its shares to the public. The law provides that the Private Company shall not without the consent of all its members, sell assets having a value of more than 50% of the total value of the Company’s assets. It must, by its articles of association, restrict the transferability of its shares.
  • The total number of members of a private company shall not exceed fifty (50), not including members who are bonafide in the employment of the company.
  • Where two or more persons hold one or more shares in a private company jointly, they shall be treated as a single member. Thus, joint holders of shares are deemed to be counted as a single member.
  •  A private company is not, unless authorized by law allowed to invite the public to subscribe for any share or debenture of the Company or deposit money for a fixed period or payable at call, whether or not it is bearing interest.
  • In the repealed 2004 Act, the minimum share capital to incorporate a Private Company was N10, 000 (Ten Thousand Naira), now under the new Act, the minimum share capital to incorporate a Private Company has been increased from N10,000 to N100,000 (One Hundred Thousand Naira).
  • The name of a Private Company limited by shares must end with the word “Limited” or “LTD”.
  • A private company does not need to keep certain statutory books like the Index of members.
  • A private company has no restriction in the appointment of an over-aged director of (70yrs and above).
  • The appointment of a Company Secretary is now optional for a Private Company in Nigeria.
  • A private company just starting needs not to appoint auditors.

A Private Company limited by shares is most suitable and recommended where a small or medium-sized business needs to acquire an incorporated status with the Corporate Affairs Commission or where family members and/or friends intend to carry on business with an incorporated status with no interference from outsiders or where the capital available to start up the business is relatively small, that is, less than N500, 000 (Five Hundred Thousand Naira).

Public Limited Company

A Public Company is any company other than a Private Company, and which is expressed in its Memorandum of Association to be a Public Company. The liabilities of its members must be restricted by the memo to the amount, if any, left on paid on the shares respectively held by them.

Features of a Public Company

  • A Public Unlimited Company must be registered with a share capital, not below the minimum issued share capital of N2, 000,000 (Two Million Naira).
  • It can raise money from the public by offering its shares or debentures to the public and inviting them to subscribe. This makes it easier to raise funds through the capital market when it is listed on the stock exchange.
  • By section 18 of CAMA, to incorporate a Public Company, it must have a minimum of 2 members, but unlike the private company, there is no limit to its maximum number of members.
  • A Public Company is required by the Act to have at least three independent Directors. An independent director is one who or whose relative either separately or together with him during the two years preceding the time in question was not an employee of the company, did not receive payment from the company of more than N20,000,000 (Twenty Million Naira) or own more than 30% shares or other ownership interest directly or indirectly in an equity made or received from the company.
  • It is mandatory for a Public Company to appoint a Company Secretary. The person who can be appointed the company secretary of a public company must either be a legal practitioner, chartered accountants, chartered secretaries, or a firm of any of them or must have held the office of company secretary of a public company for at least three (3) of the five (5) years immediately preceding his appointment in a public company.
  • Section 235 of the Act provides that every Public Company must hold its statutory meeting within a period of six months from the date of its incorporation.
  • A Public Company must publish additional notices of its Annual General Meeting in the newspapers and such notice must be given to all those who are entitled to receive it.
  • The name of a public company limited by share must end with “Public Limited Company (PLC).

Differences between a Private Company and Public Limited Liability Company  

The differences between both company structures can be derived when juxtaposed together.

  • The memorandum of a Private Company state that it should be private while for a Public Company, its memorandum states it to be Public Company.
  • There is a restriction in the transfer of shares in a Private Company limited by shares; no such restrictions exist in a Public limited liability company.
  • The number of members in a private company must not exceed 50; there is no such limit for a Public Limited Liability Company.
  • A private company unless authorized by law cannot invite the public to subscribe to its shares while a Public Company listed on the floor of the Nigerian Stock Exchange, is subject to compliance with the provisions of Investment and Securities Act and can offer its shares to the general public.
  • The newly authorized share capital for a Private Company limited by shares is N100, 000 (One Hundred Thousand Naira), while that of a public company is N2, 000,000 (Two Million Naira).
  • A Public Company is required by law to hold a compulsory statutory meeting within six months of its incorporation while a Private Company is not required to hold such a meeting.
  • The appointment of a Company Secretary is mandatory for a Public Company and the qualification of the Company Secretary is specified. No such requirement is for a private company.
  • The name of Private Company limited by shares ends with Limited or LTD while a Public Company ends with Public Limited Company or  PLC.

Conclusion

The key points of differences between a Private and Public Limited Liability Company have been highlighted above. These differences should act as a guide in deciding which type of business organization to form or incorporate in Nigeria. However, it is noteworthy to state most companies often begin as a Private Company in Nigeria; it is only after years of successful or profitable operations as Private Companies that some interested companies change their incorporation status to Public Companies, so as to open rooms for public investors or shareholders.