Small and Medium Enterprises Equity Investment Scheme

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Region:
Nigeria

Sector:
Agriculture and Agri-processing
Clothing and Textiles
Construction and Materials
Delivery Services/Logistics
Electronics
Food and Beverages
Health Care
ICT - Information and Communication Technology
Infrastructure
Pharmaceuticals
Telecommunications
Tourism
Travel and Leisure

Summary:
The Small and Medium Enterprises Equity Investment Scheme (SMEEIS) requires all banks in Nigeria to set aside 10% of their Profit After Tax (PAT) for equity investment and promotion of small and medium enterprises.

Description

The Small and Medium Enterprises Equity Investment Scheme (SMEEIS) is an initiative of the Bankers' Committee. The initiative was in response to the federal government's concerns and policy measures for the promotion of small and medium enterprises (SMEs) as vehicles for rapid industrialisation, sustainable economic development, poverty alleviation and employment generation.

The Scheme requires all banks in Nigeria to set aside 10% of their Profit After Tax (PAT) for equity investment and promotion of small and medium enterprises. Funding to be provided under the scheme shall be in the form of loans or equity investment or a combination of both in eligible enterprises.

Activities covered by the scheme:

Every legal business activity is covered with the exception of:

Trading/merchandising

Financial Services

Definition of a small and medium enterprise:

For the purpose of this scheme, a small and medium enterprise is defined as any enterprise with a maximum asset base of N1.5-billion (excluding land and working capital), and with no lower or upper limit of staff. This is subject to review by the Bankers' Committee from time to time.

Eligibility for funding:

To be eligible for funding under the Scheme, a prospective beneficiary shall:

Comply with the provisions the Companies and Allied Matters Act (1990) such as filing of annual returns, including audited financial statements; and

Comply with all applicable tax laws and regulations and render regular returns to the appropriate authorities.

Modalities of the scheme:

Funds invested by participating banks shall be in the form of loans or equity investment or a combination of both in eligible enterprises.

Interest on loan shall be single digit subject to a maximum of 9%.

Maximum amount investible in any enterprise:

The maximum amount investible in any enterprise is limited to 20% of the bank's annual set aside funds subject to a maximum of N500-million.

Deadline for investing funds/investment exit:

The time limit to invest the funds set-aside shall be 12 months after the AGM of the bank.

Banks shall remain equity partners in the business enterprises for a minimum of 3 years after which they may exit anytime.

Requirements by beneficiaries:

Beneficiaries will be expected to:

Ensure prudent utilisation of funds;

Keep up-to-date records on the companies’ activities under the Scheme;

Make the companies books, records and structures available for inspection by the appropriate authorities (including banks and the CBN) when required;

Comply with guidelines of the Scheme; and

Provide monthly financial and operational reports to the investing banks before the 15th of the next succeeding month.

The recommendations of industrial associations, particularly Manufacturers Association of Nigeria (MAN); National Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA); National Association of Small and Medium Scale Enterprises (NASME); and National Association of Small Scale Industries (NASSI) will be mandatory for members of these associations. Membership of recognised NGOs engaged in entrepreneurial development and promotion of small and medium scale enterprises will also be an advantage.

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