now now

Registration for FG’s MSME survival fund to open Monday

by with No Comment Businessfinance

The federal government has announced that registration for the N75 billion survival fund for micro, small and medium enterprises (MSMEs) will begin on Monday, September 21.

READ ALSO: CardinalStone’s West Africa SME Fund Closes at $64M

Mariam Katagum, minister of state for industry, trade and investment, said the programme is aimed at tackling the economic challenges faced by small businesses as a result of the coronavirus outbreak.

Katagum was speaking at the virtual commissioning of the fashion cluster shared facility for MSMEs tagged ‘Eko Fashion Hub’ in Lagos on Friday.

Katagum explained that the programme, which would run for an initial duration of three months, would be opened for 1 .7 million entities and individuals across the country.

“The federal government is fully committed to empowering Nigerians; more so in the face of the COVID-19 pandemic,” she said.

“In this regard, the government, through the economic sustainability committee had announced specific programmes aimed at cushioning the impact of COVID-19 on MSME businesses.

“These programmes include among others, the N75 billion MSME survival fund and Guaranteed Off-take schemes of which I have the honour to chair the steering committee for the effective implementation of the projects.

“The project, which will run for an initial period of three months, is targeting 1.7 million entities and individuals and has provisions for 45 percent female-owned businesses and five per cent for those with special needs.”

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SME Fund

CardinalStone’s West Africa SME Fund Closes at $64M

by with No Comment Businessfinance

Lagos-based private equity fund manager CardinalStone Capital Advisers (CCA) has announced the final close of its maiden private equity fund, the CardinalStone Capital Advisers Growth Fund LP (CCAGF ) at US$64 million.

READ ALSO: CBN holds benchmark interest rate at 11.5%

The CCAGF is a generalist fund that makes equity investments of $5 million–$10 million in high-growth SMEs operating across a range of sectors including industrials, agribusiness, consumer goods and services, education, healthcare, and financial services.

CCAGF investors, which are a mix of commercial and development finance institutions include Kuramo Capital, the UK Government’s CDC Group, FMO – the  Dutch Entrepreneurial Development Bank, the International Finance Corporation (IFC, part of the World Bank Group), the Nigerian Sovereign Investment Authority (NSIA) and a number of high-net-worth individuals.

The Fund, which recorded its first close in December 2018 and final close in September 2020, was established to support the growth and institutionalisation of small and medium-sized enterprises (SMEs) operating in two of West Africa’s leading economies – Nigeria and Ghana. 

Private equity companies raise and manage funds that are invested in different sectors. The first step in raising funding is announcing and marketing the funding to potential investors. The initial closing refers to the period within which the first set of investors commit to putting money in the fund while the final close refers to when the last set of investors have committed to investing in the fund.

The CardinalStone Fund has invested in two businesses, iFitness Center Limited and AppZone Group Limited, and plans to invest in another 6-7 companies over the next 2 years.  

iFitness, a Nigeria-based fitness chain, operates with a mission of improving the overall health and well-being of the average Nigerian by providing high-quality, yet affordable fitness offerings.  Meanwhile, the fintech solutions provider, AppZone, provides a bouquet of financial services offerings.

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CBN

CBN holds benchmark interest rate at 11.5%

by with No Comment financeNews

The Central Bank of Nigeria (CBN) on Tuesday retained its benchmark interest rate, known as the Monetary Policy Rate (MPR), at 11.5 percent after the two-day Monetary Policy Committee (MPC) meeting in Abuja, citing inflation concerns.

READ ALSO: How to invest when inflation bites

This comes not as a surprise as analysts in the financial services sector had expected a hold following persistent uptick in inflation rate and weak growth.

Nigeria’s inflation rose to 17.33 percent in February 2021 from 16.47 percent in January 2021, according to data from the National Bureau of Statistics (NBS).

In the fourth quarter of 2020, Nigeria’s economy sluggishly recovered from a recession it slipped into in the second quarter (Q2) of 2020 – after output contracted for two consecutive quarters.

Real GDP grew by 0.11 percent in the fourth quarter of 2020, from -3.62 percent in Q3 2020, according to NBS data.

The CBN also retained the Cash Reserve Ratio (CRR) at 27.5 percent, Liquidity Ratio at 30 percent as well as the Asymmetric Corridor around the MPR at +100/-700 basis points.

Given the fact that the rise in inflation has been due to cost-push factors rather than demand pull factors, Godwin Emefiele, governor of the CBN, said the Monetary Policy Committee has placed greater weight on utilising tools that would strengthen the nation’s productive base as a nation.

Taiwo Oyedele, head of Tax and Corporate Advisory Services at PwC, had said the rising inflation would be of concern to the MPC as it does not support any expansionary policy changes. He said a contractionary policy adjustment would hurt the fragile economic growth and recovery.

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Trade sector

Afreximbank, NEXIM sign $50m deal to boost Nigeria’s trade sector

by with No Comment financeNews

African Export-Import Bank (Afreximbank) and the Nigeria Export-Import Bank (NEXIM) have signed a Memorandum of Understanding (MoU) to establish a Joint Project Preparation Fund. This will provide early project preparation financing and technical support services to public and private sector organisations operating in Nigeria’s trade sector.

READ ALSO: Bankly gets $2m seed funding to financially include 2m Nigerians

Signed on 20 February 2021, the MoU provides that Afreximbank and NEXIM will collaborate through the Joint Project Preparation Fund to unlock investments into sectors such as export manufacturing, agro-processing, solid minerals development and beneficiation services, as well as healthcare, Information, and Communications Technology, and creative industries.

The Joint Project Preparation Fund will support public and private sector investors by providing technical and financial support services that will result in a steady pipeline of well-structured, bankable projects that Afreximbank, NEXIM, and other financial institutions can readily fund.

The Fund will assist the early development process of projects from concept stage to bankability by covering the preparation of feasibility studies, project development and advisory services and related costs.

Afreximbank and NEXIM aim to mobilise up to US$50 million in the form of project preparation funds for investments in Nigeria.

Benedict Oramah, President of Afreximbank, said, “The execution of this Memorandum of Understanding marks yet another significant milestone in our collaboration with NEXIM. I am particularly pleased that Afreximbank and NEXIM are boldly venturing upstream to help investors develop well-structured projects that meet market standards.”

This intervention is timely and the Fund will play a catalytic role in accelerating the diversification of the Nigerian economy by ensuring a steady flow of bankable projects in priority tradable sectors in a timely manner.

In addition to enhancing bankability, the Fund will, on a case-by-case basis, undertake feasibility studies to assess the viability of accessing markets in the sub-region, thereby promoting intra-African trade under the AfCFTA.

This replicates a similar initiative that Afreximbank pioneered in Malawi in partnership with Malawi Export Development Fund (EDF).

Abubakar Abba Bello, managing director of NEXIM, said his bank was pleased about the partnership opportunity with Afreximbank.

This will resolve the challenges associated with the shortage of credit in Nigeria’s trade sector.

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BANKLY

Bankly gets $2m seed funding to financially include 2m Nigerians

by with No Comment Businessfinance

In the next three years, over 2 million Nigerians are likely to gain access to financial services thanks to a $2 million seed funding raised by Bankly on Wednesday.

READ ALSO: Here’s why investment-interest in Eko Atlantic is high despite economic slowdown, land price

Founded in 2018 by Tomilola Adejana and Fredrick Adams, Bankly is looking to put a bank in the pocket of Nigeria’s 36m unbanked adults. Bankly’s primary strategy is to deploy money agents across the country. Haven started with about 2000 agents, Blankly plans to expand to a 15,000 agent network with its new funding.

The latest seed fundraising led by Vault and Flutterwave with participation from Plug and Play Ventures, Rising Tide Africa and Chrysalis Capital.

“We’re thrilled to have closed this milestone fundraise and to have such seasoned fintech investors who understand the market join us on this journey to bank Nigeria’s unbanked. Our goal has always been to reach the last mile using a fast-moving consumer strategy.

Now we have built the agent network and are poised to serve customers directly via offline and online channels. Partnerships, collaboration, and a deep understanding of the needs of the unbanked will be vital to our success,” said Tomilola Adejana, CEO and Co-founder of Bankly.

Bankly plans to increase its 35,000 customer base in cash dependent communities.

To achieve this, the company plans to grow the number of its physical “cash in” points by expanding its 15,000 person agent network and plugging its API into partner networks. Bankly will also develop direct-to-consumer (DTC) products for its customer base that will be available through its app and USSD channels.

Over the next three years, Bankly aims to grow its customer base to 2 million unbanked Nigerians, supporting the aims of the Central Bank of Nigeria’s National Financial Inclusion Strategy.

“Given our over 20 years experience in Nigeria’s fintech industry and previous exits, we strongly believe that Bankly understands the nuanced needs of this market – not to mention the team, strategy, and technology — to succeed in bringing affordable financial services to the unbanked.

We are delighted to participate in this financing round as Bankly moves into its next growth stage,” said Idris Alubankudi Saliu, Partner, Vault.

Bankly allows ajo participants to save their money using both online and offline methods.

Customers can deposit and withdraw cash with a Bankly agent or make payments using its app or USSD function.

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Eko Atlantic Investment

Here’s why investment-interest in Eko Atlantic is high despite economic slowdown, land price

by with No Comment Businessfinance

At a time when many developments are struggling to get off ground as a result of Covid-19 impact and general slowdown in economy, investment interest in Eko Atlantic City in Lagos remains high.

READ ALSO: Union Bank Customers Deposit Hits

This interest is not affected either by the high land price in the city which is way ahead of what obtains in adjoining highbrow neighbourhoods such as Old Ikoyi, Victoria Island and Lekki Phase 1, meaning that the city has values and attractions that investors find too hard to resist.

Sitting on 10 million square meters of land reclaimed from the Atlantic Ocean, Eko Atlantic is Nigeria’s most ambitious new city located adjacent to Victoria Island in Lagos. It is planned to be a self-sustaining city that will be home to 300,000 residents with 250,000 others expected to work in the city.

The city is protected from ocean surge or other adverse environmental issues by a sea wall known as Great Wall of Lagos, measuring nine metres above sea level, 85 kilometres long and 46 kilometres wide.

Right from inception, investors have shown interest in the project and confidence in the developers, South Energyx Nigeria, and their ability to deliver a world class city.

“More people are beginning to recognise that the project is for the future and would become one of the major cities in the world,” David Frame, managing director of South Energyx, noted during a tour of the project recently.

This, more than anything else, explains why investors have continued to flock to the city.

Though the price of land in the city is a guarded secret, a source close to the firm’s marketing department says a square metre of land in the city goes for well above $1,000 mark, depending on location.

This contrasts with prices in Old Ikoyi which, according to a Northcourt market report, sold for N436,667 and N415,000 per square metre in 2019 and 2020 respectively.

In Victoria Island, the report says land sold for N351, 912 and N330,000 per square metre in 2019 and 2020 respectively, while Lekki land sold for N184,361 and N198,000 per square metre in 2019 and 2020 respectively.

In spite of this price differential, about 70 per cent of land in phases one and two of Eko Atlantic has been sold out, according to Frame.

Also, 50 per cent of the reclaimed areas in phases 1, II and II1 have infrastructure such as road, bridges, streetlights, wastewater treatment plants, sewage, and canals.

This shows the unimaginable level to which good infrastructure can drive demand in real estate.

It draws yield-hungry investors like the sweet-smelling nectar draws insects to a flower. Infrastructure is key.

“90 percent of the needed infrastructure in phase 1 has been completed, 70 percent in phase 2 and about 20 percent in phase 3,” the managing director disclosed, adding that phases 4, 5 and 6 of the city were on the way while they were considering starting sand-filling for phase 4 soon.

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Inflation

Inflation: Relief as inflation to moderate around May

by with No Comment financeNews

Nigeria’s economy may likely heave a sigh of relief should the inflation rate moderate in May as optimistically stated by Godwin Emefiele, Governor, Central Bank of Nigeria (CBN), after announcing a hold on its benchmark interest rate and other parameters on Tuesday.

READ ALSO: Fuel Marketers Raise Diesel Price To N265 Per litre

The Monetary Policy Committee (MPC), which concluded its two-day meeting on Tuesday, has been confronted with a policy dilemma, with inflation rising for 18 consecutive months to 17.33 percent in February 2021.

The dilemma that confronted the MPC relates to whether to focus on efforts to stimulate output growth or focus on the raging inflation, which at 17.33 percent is almost attaining the January 2017 inflation rate of 18.72 percent.

“The country just crawled out of recession in Q4 2020, if the MPC tightens, it would constrain liquidity, the interest rate would be high and it would make it difficult to access credit needed that investment need to drive growth and the economy could slip back into recession,” Emefiele said.

Nigeria’s Gross Domestic Product (GDP) grew by 0.11 percent (year-on-year) in real terms in the Q4 2020, representing the first positive quarterly growth in the last three quarters.

Though weak, the positive growth reflects the gradual return of economic activities following the easing of restricted movements and limited local and international commercial activities in the preceding quarters, the National Bureau of Statistics (NBS) said.

“We would not lose sight on inflation. Inflation may move up in April, but we expect inflation to begin to moderate from May. By that time we should have our Q1 GDP numbers and we hope it shows significant growth and then we begin to attack inflation,” Emefiele said.

But analysts in the financial services sector disagree with the CBN governor’s optimism, citing a high level of insecurity, which has obstructed productivity in the agriculture sector.

Uche Uwaleke, professor of capital market and president, Capital Market Academics of Nigeria, said that would be too optimistic since inflationary pressure was more on food.

“I don’t see inflation rate moderating significantly till the end of the third quarter that is by September, about the time harvest season sets in. Besides, insecurity and likely flooding between now and May remain downside risks,” Uwaleke noted.

However, the committee decided by a vote of three members to increase the Monetary Policy Rate (MPR) by 50, 75 and 50 basis points, respectively, and six members voted to hold all parameters constant.

The MPC noted the overarching need of taming the rising inflation and sustaining growth recovery in the economy while focusing on downside risks associated with the injections.

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FG SMEs

FG to support MSMEs with $1bn syndicated loan

by with No Comment Businessfinance

As part of efforts to boost Nigeria’s economic recovery and sustainable growth, the Bank of Industry (BoI) under the supervision of the Federal Ministry of Industry, Trade and Investment has concluded a $1billion syndicated term loan in conjunction with international partners to further support Small and Medium Scale Enterprises (MSME) in the country.

READ ALSO: BusinessDay with NetPlusDotCom Set to Host March Edition of Monthly Digital Webinar Series for SMEs

Minister of Industry, Trade and Investment, Otunba Adeniyi Adebayo, said the loan is aimed at “further improving the capacity of the bank to effectively support Micro, Small and Medium Scale Enterprises (MSME) – across key sectors of the Nigerian economy – with affordable loans of medium to long-term tenor, alongside moratorium benefits.”

Adebayo who disclosed this on Monday at the Quantum Mechanics Limited MSME Survival Fund capacity building programme in Abuja, also said discussion were ongoing with Dunn & Bradstreet to establish an SME risk rating agency – the SME Rating Agency of Nigeria (SMERAN), to provide empirical basis  for analysing the eligibility of SMEs to access credit.

The Minister who spoke on efforts of the Federal Government at supporting MSMEs in the country said, “I will like to reiterate that our Ministry fully supports MSMEs, as demonstrated by our MSME Survival Fund Initiative launched in the wake of the COVID-19 pandemic by the Federal Government as part of the Nigerian Economic Sustainability Plan (NESP); aimed at protecting MSME businesses from shocks the pandemic. The Fund comprises the Payroll Support Scheme which aims to support MSMEs in meeting their payroll obligations and safeguard jobs by paying up to N50,000 to a maximum of 10 employees in each MSME for three months; the Artisan and Transport Grant which supports self-employed artisans with a one-off payment of N30,000 targeting 333,000 individuals; the General MSME Grant which will provide 100,000 MSMEs with one-off grants of N50,000 each; and the Guaranteed Offtake Scheme which will engage approximately 100,000 businesses across the country to produce items typically manufactured in their locality, targeting 300,000 beneficiaries, including free registration of companies for 250,000 beneficiaries.”

He explained that the survival fund was estimated to save at least 1.3 million jobs across the country…

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FG MSMEs

BOI $1bn loan will improve capacity of MSMEs

by with No Comment Businessfinance

BOI $1bn syndicate loan will improve capacity of MSMEs- FG

The Federal Government has revealed that the Bank of Industry (BoI) under the supervision of the Ministry of Industry, Trade and Investment has concluded a $1billion syndicated term loan in conjunction with international partners to further support Small and Medium Scale Enterprises (MSMEs) in the country.

READ ALSO: Inflation tops discussion as MPC meets today

Disclosing this in Abuja, on Monday, at the Quantum Mechanics Limited MSMEs survival Fund Capacity Building, the Minister of Industry, Trade and Investment, Otunba Adebayo, said the loan is aimed at “further improving the capacity of the bank to effectively support Micro, Small and Medium Scale Enterprises (MSME) – across key sectors of the Nigerian economy – with affordable loans of medium to long-term tenor, alongside moratorium benefits.”He noted that “there is an ongoing discussion with Dunn & Bradstreet to establish an SME risk rating agency – the SME Rating Agency of Nigeria (SMERAN), to provide an empirical basis towards analysing the eligibility of SMEs to access credit.

“I will like to reiterate that our Ministry fully supports MSMEs, as demonstrated by our MSME Survival Fund Initiative which was launched in the wake of the COVID-19 Pandemic by the Federal Government as part of the Nigerian Economic Sustainability Plan (NESP); aimed at protecting MSME businesses from the shocks the Pandemic.”The Minister explained that the survival fund was estimated to save at least 1.3 million jobs across the country while strengthening the growth potential of beneficiary businesses, stressing that the successful implementation of the scheme so far has contributed immensely to quickly pulling Nigeria out of the COVID-19-induced recession.

He said the National MSMEs Clinics also support the growth of small businesses across the country through the provision of critical infrastructure, with twenty-six of such clinics having impressive results.

According to a statement made available to newsmen by Ifedayo Sayo, Adebayo further disclosed that the Nigerian Export Promotion Council (NEPC) has launched the Export Expansion Facility (EEF) under the NESP, to support the resilience of new and existing MSMEs to respond to the shocks of the COVID-19 Pandemic to retain and create more jobs, especially youth and women businesses through the Youth Export Development Programme (YEDP) and Promoting Women Inclusiveness in Non-Oil Export.

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Inflation MPC

Inflation tops discussion as MPC meets today

by with No Comment Businessfinance

Nigeria’s Monetary Policy Committee (MPC) commences its second meeting for the year 2021 today, and will tomorrow announce policy decision on interest rate direction for an economy that sluggishly exited recession in the fourth quarter of 2020.

READ ALSO: Nigerian startups raise more money in a single month than whole of 2020

Maintaining the status quo may likely play out after the meeting, as most analysts polled by BusinessDay expect a ‘Hold’ on the benchmark interest rate due to rising inflation.

Nigeria’s inflation rate increased to 17.33 percent in February 2021, from 16.47 percent recorded in the previous month, according to the National Bureau of Statistics (NBS).

While the Central Bank of Nigeria (CBN) does not formally targets inflation, confining itself to a reference range of between 6 percent year-on-year (y/y) and 9 percent for the headline measure, the trajectory of inflation is such that it would be a challenge to argue for further monetary easing, analysts at FBNQuest said.

“Nigeria’s MPC meets next (this) week, and we struggle to see any decision other than an unchanged stance,” the analysts said.

At the last MPC meeting in January, the committee retained the Monetary Policy Rate (MPR) at 11.50 percent, with the asymmetric corridor remained at +100/-700bps around the MPR.

Also, the Cash Reserve Ratio (CRR) and Liquidity ratio were left unchanged at 27.5 percent and 30 percent, respectively.

“I expect the MPC to hold the rates in March. Yes, inflation rate is rising but economic recovery is still weak at 0.11 percent in previous quarter,”Uche Uwaleke, professor of capital market and president, Capital Market Academics of Nigeria, said.

He noted that, inflationary pressure was more from cost push factors, saying, “I expect that the MPC will advise the CBN to continue to use development finance initiatives through increased interventions to support economic recovery, especially via stimulation of agricultural output to stem rising inflation.”

Nigeria’s Gross Domestic Product (GDP) grew by 0.11 percent y/y in real terms in the fourth quarter of 2020, representing the first positive quarterly growth in the last three quarters.

Though weak, the positive growth reflects the gradual return of economic activities following the easing of restricted movements and limited local and international commercial activities in the preceding quarters, the NBS report noted.

Taiwo Oyedele, head of tax and corporate advisory services at PwC, is of the view that the rising inflation will be of concern to the MPC and certainly does not support any expansionary policy changes, while on the other hand a contractionary policy adjustment will hurt the fragile economic growth and recovery. “So, I expect the MPC to maintain status quo,” he said.

Given the fact that the rise in inflation has been due to cost-push factors rather than demand pull factors, Godwin Emefiele, governor of the CBN, said MPC had placed greater weight on utilising tools that would strengthen the nation’s productive base as a nation.

These measures, such as the intervention programmes being implemented by the bank, will help to improve output by enabling improved production of staple food items. This would ultimately help to support lower food prices and a more favourable outlook for food inflation, Emefiele said at the last MPC meeting.

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