How CBN COVID-19 Loan Kept Us In Business—Beneficiaries

No matter what the experts say about the Nigerian economy, some small scale entrepreneurs are enjoying a boom in their businesses, thanks to a COVID-19 loan palliative given out by the Central Bank of Nigeria.

Many of the businesses affected by the negative impact of the Coronavirus pandemic that benefitted from the intervention of the Central Bank of Nigeria have been able to kickstart their businesses with the loan.

Findings by THE WHISTLER showed that as of the end of August, the CBN had disbursed the sum of N59.12bn as Covid-19 loans to support 103,189 beneficiaries under its development financial initiatives.

The CBN had introduced the
Targeted Credit Facility as a stimulus package to support households and
Micro, Small and Medium Enterprises affected by the COVID-19
pandemic.

Based on the guidelines released by the CBN, those that can benefit from the fund are households with verifiable evidence of livelihood adversely impacted by
COVID-19;
and existing enterprises with verifiable evidence of business activities
adversely affected as a result of the COVID-19 pandemic.

According to the CBN guideline, activities covered under the scheme include agricultural value chain activities; hospitality (accommodation and food services);
health (pharmaceuticals and medical supplies);
and airline service providers.

Others are
manufacturing/value addition; trading
and any other income generating activities as may be prescribed by the CBN.

This Newspaper spoke to some of the beneficiaries of the CBN intervention who said that the loan had been able to assist them in reviving their businesses that were badly affected by the negative impact of the Coronavirus pandemic.

One of the beneficiaries, Mr Gabriel Kuma who is based on Abuja said that he decided to collect the loan in order to start a business.

He said the decision to start his own business was based on the conviction that it would help to diversify his source of income.

He said having to depend on salary alone was affecting his standard of living and with the impact of Coronavirus pandemic which led to loss of income for firms and individuals, there was need to come up with a sustainable means of income.

When asked the type of business that he was able to set up with the loan, Kuma said he decided to go into food production and commodities trading.

Kuma said his decision to go into food production was based on the conviction that there is always a huge demand for food.

To achieve his objectives, he told this Newspaper that he decided to expand his farms in Nasarawa state.

He said, “Predictions from Covid-19 had it that there will be a global recession owing to lockdown both globally and in Nigeria.

“This means food will be more expensive as currencies will depreciate in value, not to mention the naira that has undergone several depreciation.

“As an employee then, I needed to figure out what brings an extra stream of income to me so as to cushion the effect of the recession.

“Having known that people must eat no matter the circumstances, I decided to invest in food production,crops to be specific.”

Kuma said a substantial part of the money has also been invested into commodity trading especially buying from farmers at harvest when it’s very cheap and storing for sale next year when price are almost double or more.

He added, “My business is booming. While I await the harvest season for soyabeans, beans and rice, I have already purchased tens of bags of Egusi and rice.”

Mindful of the fact that the money is a loan and not a grant, Kuma said he would use it strictly for the business.

He said, “Well, being mindful of the fact that it’s a loan and not a grant, I insist on using it strictly for business because I will definitely pay back.

“That notwithstanding, it has helped to augment some of my spendings and made me more stable.

“Nigeria cannot escape this recession or depression at worst case scenario having experience a -6 per cent growth in the second quarter of this year.

“The CBN and government need to focus more on small businesses by extending more loans and grants to them so as to keep them running even I recession.

” It is a fact that SMEs contribute so much in pulling any economy out of recession. Support for SMEs is support for a viable economy.”

Another beneficiary of the loan, Mr Agasi Peter said he was able to expand his existing business with the Covid-19 facility.

Peter who is also based in Abuja said having spent a substantial part of the capital of his business to survive the impact of the Coronavirus pandemic on the economy, there was need to inject fresh funds into the business.

He said, “I have two supermarkets and they were all doing well in terms of sale and profitability. But during the lockdown, things became tough because I could not open my shop as the market was totally shut.

“Since the entire economy was on shutdown then, there were no fresh funds coming from my businesss. We have to survive and as such, the little money I had in the bank which I had kept to buy goods was what we fell back on for survival.

“So we started spending from that money until the restrictions were eased. I needed fresh capital and I approached our market association to borrow money but the demand from other members for loan was too much on the association.

“I then decided to apply for the CBN Covid-19 loan and I was able to access the sum of N2.5m. With that, I have been able to revive my business and things are back on track again.

“I’m doing everything possible to further grow the business so that I can be able to repay the loan after the moratorium period of six months given by the bank for the facility.”

Another beneficiary who gave his name as Gbenga Joseph said he was able to use the loan to expand his mobile money agent business in Abuja.

He said, “I started a mobile money agent business last year and I have only one outlet. I have been making efforts to expand the business into two or three outlets but the capital to do that has been lacking.

“During the lockdown, one of my friends told me about the CBN Covid-19 loan and I applied.

“The loan was processed and approved. The money I got has been used to set up three other mobile money outlets and I have also employed people to manage it for me.

“So far, the returns on investment have been encouraging. With the type of revenue that is coming in from the business, I should be able to repay the loan.”

The Managing Director, NIRSAL Microfinance Bank, Mr Abubakar Kure, while speaking during the disbursement of the loan warned that facility being disbursed is not a grant.

He urged beneficiaries to use the fund for the purpose it was collected for because the bank would ensure that all those who took the facility must repay what they took.

He said, “This is not a grant, it is a credit facility intended to cushion the impact of COVID-19 on businesses particularly SMEs.

“SMEs are the engine of any economy because they provide employment and taxes to government.

“We urge people to apply, you don’t need to know anybody before you apply and once you qualify, you will be given the loan.”

The N50bn intervention is being financed from the Micro, Small and Medium Enterprises
Development Fund.

In terms of limit, the loan amount would be determined based on the activity, cashflow
and industry size of beneficiary, subject to a maximum of N25m for SMEs.

Households could access a maximum of N3m while
working capital would be a maximum of 25 per cent of the average of the previous three years’ annual turnover.