Yusuf: Our Focus in 2022 Shall Be to Increase Nigeria’s Non-oil Exports

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The Director, Development Finance Department, Central Bank of Nigeria, Mr. Philip Yila Yusuf, in this interview monitored on Arise News Channel, sheds more light on the bank’s interventions. Excerpts:

Tell us more about this new entrepreneurship scheme for universities and polytechnics’ graduates?

This scheme is a culmination of the promise made by the Governor, Mr. Godwin Emefiele in July this year at the University of Lagos that the central bank would work with tertiary institutions to unleash the potential that we see in our young graduates. So, what we have done over the last six months was to work with these institutions to create a framework or a window for our young graduates – those who are in school and those who have left school, to be able to access innovative financing for them to be able to unleash the potential they have and contribute to national development. The framework that was released has three components. One is the term loan; another is the development component and the equity component, for us to be able to invest in these businesses.

What makes this scheme or intervention unique?

What makes it unique is the fact that this is the first time that you are getting our youths uncollateralised loans in the case of the term loan component at single digit interest rate. You also have the fact that there is also an equity investment component. So, we will be able to invest in either startups or businesses that need financing. And also most importantly the last part which is also a grant, we are providing grants to some of the tertiary institutions who have bankable ideas that can easily be monetised. So, they will go and pitch their ideas and we will select the top five and we will give them between N250 million and N120 million for them to be able to either monetised their ideas or try and do some breakthrough research.

Six months ago, one of the universities in the country approached us and talked about the fact that they could provide maize seeds that can do close to eight tonnes per hectare. Before the Anchor Borrower Programme, across the country we are doing between two and three tonnes per hectare for maize. But they are ready to push that envelop to eight tonnes per hectare. So, you can imagine the amount of output that would be cultivated across the country. So that just gives you the kind of idea that can be bankable. So, we are giving the loan at single digit interest rate and if you recall, post-COVID was still in the regime of five per cent.

So this term loans are going to be given at five per cent for individuals who want to access, they can take a maximum of N5 million at five per cent. There is one year moratorium for the loan and duration of five years. Our graduates can also come together into a partnership and we are already seeing a lot of that for those who have applied and they can take up to a maximum of N25 million for five years and there is a moratorium of one year on the principal. We have democratised the process, so all they need to do is go to the central bank’s website, they will see the link to the intervention, and then they apply, upload their certificate.

We are not asking you for any collateral, just your NYSC discharge certificate, and then you put in your proposal. We will evaluate all that and then if you are successful you would get the loan. Five were successful and the central bank governor presented cheques to them last week. We will go through the process, select those we believe deserve this term loans and then disburse to them. It is a very simple process, throughout the stage of the application, they will be communicated to on the status of their application and when they are successful, they will get the funding through any participating financial institution of their choice.

What are the mechanisms the CBN has put in place to ensure the success of this scheme?

There is a wide variety of mechanisms that we have put in place. The first thing we have done is to try as much as possible to democratise the process. So our graduates are smart, they have access to different channels and computers so they can apply online. You don’t need to walk into any bank, you could just apply online, upload your certificate and at every stage of the process is communicated to you. We also have a very robust evaluation mechanism in place to be able to select those ideas that are bankable. So businesses around agric, creative sector, IT, will be evaluated, selected, and then they will be given various sums of money. That is for the term loan component, through any participating financial institution of their choice.

Then at the end of the day there is also a robust merger and acquisition framework in place that the central bank uses to evaluate all the interventions that we give. So, we will definitely be following up with the businesses the various channels that we have. We have developed finance officers across the country, so we visit them, try as much as possible to see how they are doing and if they have challenges, we will try as much as possible to help them sort out those challenges. Those are the various platforms and mechanisms we have in place to ensure that these graduates not only collect these term loans, they use them for the purposes that they are meant for and in did they contribute to national output. For the equity component which we will be starting in April, there is the quasi-equity type of intervention we will be doing through the bankers’ committee platform.

We will invest in startups; every year five per cent of the profit after tax of each deposit money banked is pooled into a fund, 45 per cent of that is supposed to be given out as debt, 50 per cent of that for the equity component. We will look at these businesses, two fund managers would be appointed, and they will look at these businesses and invest up to a maximum of N2 billion for the businesses, up to a maximum of the 40 per cent shares of the business. And that will last for 10 years then they will exit from those businesses. Then I talked about the development component, there is a body of experts that has been appointed, led by the Managing Director of Sterling Bank, and 10 other Nigerians, both from the banking community and also we have some representative from National University Commission and other government Ministries, Departments and Agencies. So they will evaluate all the proposals that the universities and the polytechnics send and then then select the top five bankable ideas that can be monetised and indeed once they are selected, we will give them this grant. This grant will not be given as bullet payment, but we will follow progress as they monetise these ideas. So that at the end of the day, we believe that whatever ideas come out can contribute to national output. For the three different sub-set of the entire scheme there is a robust framework in place to be able to ensure that it goes well.

The year 2021 is gradually coming to a close, give us a bit of a rundown of your department activities so far for the year?

2021 has been a very good year. So I will start with agriculture. We have continued the flagship programme of this administration, complimenting the efforts of the fiscal authorities around our Anchor Borrowers’Programme. It has been very successful this year. I keep talking about maize. For the first time we had record harvest of maize. Typical consumption in Nigeria is about 12.5 million metric tonnes, we typical do between nine metric tonness and 10 million metric tonnes. But this year we have pushed the envelope and that is as a result of the effort of Governor Godwin Emefiele in saying that we will no longer give forex for the importation of maize. A lot of our farmers have moved into cultivation of maize across the 36 states of the federation. So, you see record harvest for maize. Apart from taking loans to be able to support our small other farmers, we have brought in a bit of ingenuity.

Instead of collecting cash, we collect these output, put it in a strategic reserve and we use that to moderate prices pending when the Nigerian Commodity Exchange is restructured and we can hand that over to them. Paddy rice is also available, you can see mills springing up all over the country trying to mill a lot of all these paddy rice that is available. So, on the Anchor Borrowers’ side, on the agricultural side, we had good harvest and we thank God there has not been a lot of flood this year, if any, so you see record harvest and that has contributed to output. If you look at third quarter GDP, agriculture, especially crop production grew a bit.

On the energy side, working with the fiscal authority, we will continue to support the Nigerian Electricity Supply Industry with wide varied interventions we have. On national mass metering, on phase zero, we set a target of one million meters, we have done over 890, 000 meters. We have provided funding for that. We have also been supporting the Discos on both their operating expenditure requirements, and also we will be supporting NBET on the payment assurance facility. On the energy side, more stable power, we have brought in more capacity online. SMEs, yes, we have continued to support that we our targeted credit facility (TCF) post-COVID.

As at today we have disbursed close to N360 billion to over 750, 000, both SMEs and households. That has really contributed to consumption. Fourth quarter last year, the TCF was partly responsible for our exit from recession. We would continue to not only do the TCF but AGSMEIS. At the last MPC, you must have seen that the efforts of the monetary authority was commended on the various interventions around the SMEs space. Health is also very important as you talked about the new variant of COVID that has come out. We have disbursed over a N107 billion to both hospitals and pharmaceutical industries to try and expand their lines.

MRI machines are being brought in, CT Scans, two cancer centres that we have funded in Lagos and we can clearly track and see exactly what they are doing. Key focus for 2022, export forms only two per cent of our portfolio as at present. Recently, the governor unveiled the ‘100 for 100,’ which is really around how we can domesticate production and also look at how we can generate non-oil exports. So, even though export is just two per cent of the pie, we are looking at how we can increase that in 2022 using the ‘100 for 100.’ It has been a year where we have had to push ourselves to the envelop especially on the agric side, but literally it is good news overall.