CBN Directs NIRSAL MFB To Charge 5% Interest On N12.5bn Youth Fund

…Pegs Maximum Amount Per Beneficiary At N3m

…Demands Credit Checks On Applicants Before Loan Disbursement

The Central Bank of Nigeria has released the guidelines for the Nigeria Youth Investment Fund with a take-off seed capital of N12.5bn.

The CBN listed NIRSAL Microfinance Bank as the eligible participating financial institution for the scheme and directed the bank not to charge an interest rate that is above five per cent per annum on the loan.

The scheme was set up to improve access to finance for youth and youth-owned enterprises for national development; generate much-needed employment opportunities to curb youth restiveness and boost the managerial capacity of the youth and develop their potentials to become the future large corporate organisations.

The Federal Executive Council had on the July 22, 2020 approved N75bn for the establishment of the Nigeria Youth Investment Fund for the period of 2020 – 2023.

The fund was dedicated to investing in the innovative ideas, skills and talents of Nigerian youths and to provide them with a special window for accessing funds, business management skills and other inputs critical for sustainable enterprise development.

The Nigerian Youth Employment Action Plan was developed by the Federal Ministry of Youth and Sports Development as a built-in strategy to respond effectively to the youth employment challenge in Nigeria.

The major objectives of the plan are to address fragmentation of youth initiatives that prevent assessment of impact and to provide Nigerian youths with investment inputs required to build successful businesses that can become sustainable employers of labour and contributors to Nigeria’s development.

The plan targets young people between the ages of 18-35 years and details the needed actions required to support business establishment, expansion and consequent employment creation for youth in critical economic and social sectors

According to the apex bank, the target of the NYIF is to financially empower youths to generate at least 500,000 jobs between 2020 and 2023.

Based on the Framework for the Operation of the NIRSAL Microfinance Bank Window of the Nigeria Youth Investment Fund, individual (unregistered business) shall be determined based on activity/nature of project subject to the maximum of N250,000 credit.

On the other hand, registered businesses (business name, limited liability, cooperative, commodity association shall be determined by activity/nature of project subject to the maximum of N3m (including working capital).

The CBN, however, added that immovable assets acquired with the loan must be registered with the National Collateral Registry.

The CBN stated that tenor for loans would be for a maximum of five years depending on the nature of the business and the assets acquired, adding that moratorium of up to one year may be allowed depending on the nature of the business and the assets acquired.

The guidelines stipulated that the youths that are duly screened and undergo the mandatory training where applicable shall be advised to log on to the portal provided by the NMFB to apply for the facility.

The CBN added that the NMFB will leverage on the General Standing Instruction as collateral while corporate guarantees will be acceptable where applicable.

It added that upon satisfactory appraisal of applications, NMFB shall apply for release of funds in respect of approved individuals/enterprises from the NYIF and CBN.

The apex bank added that NMFB would conduct credit checks on applicants and those with unsatisfactory credit reports will be rejected.

The framework stated that repayment of loans shall be made on instalment basis by the beneficiaries to the NMFB according to the nature of enterprise and the repayment schedule/work plan provided and agreed at the application processing stage.

It added that to ensure equitable participation and even access to finance by the youth across the country, applications will be batched according to state and Local Government Areas of applicants.

The CBN assured applicants that it will promote gender parity and encouraged female entrepreneurs to apply.

It explained that the Project Management Office shall be established by the Federal Ministry of Youth and Sports Development, which will work with NIRSAL MFB on applicant screening, project monitoring and reporting, among others.