Banks dedicate 5% profit to fund export-oriented businesses
The deposit money banks in Nigeria, from the 2016 financials, will set aside 5 percent of their profit after tax in pool fund to finance Nigerian businesses with export or import substitution capabilities.
The fund, which will be warehoused at the Central Bank of Nigeria (CBN), will be invested in businesses as equity investments and the banks will share in the profits based on their equity holdings.
This was announced yesterday in Abuja after the Bankers Committee Meeting. It is estimated that the pool funds may be about N25 billion annually.
Briefing journalists at the end of the meeting, Alhaji Ahmed Abdullahi, Director, Banking Supervision Department, CBN, said the initiative was to support the federal government’s drive to deepen a non-oil economy.
The Bankers Committee considered it necessary “to support the effort of the government in diversifying the economy by coming up with an initiative that will help with export drive and import substitution,” he said.
“Therefore, the committee has decided that we will be contributing 5 percent of each bank’s profit after tax in a pool of funds that will be kept at the Central Bank of Nigeria (CBN) and it will be used to finance eligible bankable projects that are meant for export or import substitution.
“The scheme will be controlled by the members of the Bankers Committee. There will be a project review committee that will review submissions from entrepreneurs that require funding. The committee will make a recommendation to the Board of Trustees of the Bankers Committee,” he explained.
He said each bank has an equity holding in the scheme based on its annual contribution from its annual profits.
Abdullahi said the scheme will start from the 2016 financials. “Banks have submitted their 2016 statement of accounts and they are to be published not later than April, 2017. So we are starting the programme this year using 2016 financials of banks. Any industry that is going to be export driven will benefit. Similarly, any industry that will provide import substitution will also benefit,” he said.
He explained further that the “Project is going to be financed for a maximum of 10 years. It can be earlier. Businesses usually do not have long term funding. This can allow an investment period of up to 10 years. Based on the banks’ last three years profit and loss accounts, we estimate about N25 billion will be contributed annually by the banks,” he said.
The Bankers Committee, also announced the reintroduction of the cashless policy that was suspended in 2014.
Chidi Umeano, Head of Shared Services, CBN, said at the briefing that, cashless policy will go nationwide before the year ends.
“The cashless policy was introduced in 2012 and was implemented in six states plus the FCT. The states are Lagos, Abia, Anambra, Kano, Rivers and Ogun.
“The policy was suspended in 2014 but we think a lot has happened since then hence the decision to continue the policy. We’ve had a lot of sensitisation all this while. The payments infrastructure in the country has greatly improved, we’ve had technology and payment challenges, USSD and other advancements.
“We have statistics to show that there is a lot of shift from cash to other forms of payments. We will have gradual reintroduction. By first of May 2017, we will take the first 10 states, by the first of August 2017, we will take another set of 10 states and by October 1st, 2017 we will roll out in the remaining states” he explained.