Take advantage of the MSMED Fund
Funding challenges have always been there for micro, small and medium businesses. The new MESMED fund created August 2013 is on the verge of take-off. Don’t be an incurable skeptic, educate yourself on the Fund guidelines and take the required steps. Start-UP Digest provides the following excerpt on the objectives and basic insight on the target beneficiaries of the Fund.
As part of its developmental functions and mandate of promoting a sound financial system in Nigeria, the Central Bank of Nigeria launched the Micro, Small and Medium Enterprises Development Fund (MSMEDF) on August 15, 2013. This was in recognition of the significant contributions of the Micro, Small and Medium Enterprises (MSME) subsector to the economy.
The subsector is characterized by huge financing gap which hinders the development of MSMEs. Section 6.10 of the Revised Microfinance Policy, Regulatory and Supervisory Framework for Nigeria, stipulates that ‘a Microfinance Development Fund shall be set up, primarily to provide for the wholesale funding requirements of MFBs/MFIs’. To achieve the provisions of Section 4.2 (iv) of the Policy, which stipulates that women’s access to financial services should increase by at least 15 per cent annually to eliminate gender disparity, 60 per cent of the Fund has been earmarked for providing financial services to women.
This informed the decision of the Central Bank of Nigeria to establish the Micro, Small and Medium Enterprises Development Fund (MSMEDF).The Fund prescribes 50:50 ratio for on lending to micro enterprises and SMEs respectively.
Only new SMEs shall be allowed to be financed by DMBs under the MSMEDF.
Special consideration shall be given to Participating Financial Institutions (PFIs) that have signed Memorandum of Understanding (MoU) with the Central Bank of Nigeria’s Entrepreneurship Development Centers (EDCs) to provide financial services to its graduates.
In addition, 2% of the wholesale component of the Fund shall go to economically active persons with disabilities (excluding mental disabilities).
Eligible Enterprises
In line with the provisions of the Revised Microfinance Policy, Regulatory and Supervisory Framework for Nigeria, enterprises to be funded under the Scheme include:
a) Micro Enterprises
b) Small and Medium Enterprises. The following are eligible activities under the Fund Microenterprises
•Agricultural value chain activities
• Cottage Industries
• Artisans
• Services to hotels, schools, restaurants, laundry etc.
• Renewable energy/energy efficient product and technologies
• Trade and general commerce
• Any other income generating enterprise as may be prescribed by the CBN.
A maximum of 10% of the Commercial component of the Fund shall be channeled to trade and commerce. This is to ensure that productive sectors of the economy continue to attract more financing necessary for employment creation and diversification of the country’s economic base.
Eligible Enterprises
In line with the provisions of the Revised Microfinance Policy, Regulatory and Supervisory Framework for Nigeria, enterprises to be funded under the Scheme include:
a) Micro Enterprises
b) Small and Medium Enterprises The following are eligible activities under the Fund:
Microenterprises
• Agricultural value chain activities
• Cottage Industries
• Artisans
• Services to hotels, schools, restaurants, laundry etc.
• Renewable energy/energy efficient product and technologies
• Trade and general commerce
• Any other income generating enterprise as may be prescribed by the CBN
Small & Medium Enterprises (SMEs)
• Manufacturing
•Agricultural value chain activities
•Educational institutions
• Renewable energy/energy efficient product and technologies.
For further details visit CBN website
Ikenna Obi