Regulatory Alerts2017-04-06 | DFD/MSEF/GEN/01/017Guidelines for the Operations of the Agri-Business/Small and Medium Enterprises Investment Scheme (AGSMEIS)
The Agri-Business/Small and Medium Enterprises Investment Scheme (AGSMEIS) is a program initiated by the Bankers' Committee of Nigeria to support and promote agricultural businesses and small and medium enterprises (SMEs) in the country. It was approved at the 331st meeting held on February 9, 2017. Participating banks contribute 5% of their annual profit after tax to the scheme, which is managed by the Central Bank of Nigeria (CBN). The objectives of the AGSMEIS include promoting economic diversification, reducing unemployment, stimulating growth in the real sector, and contributing to the overall socio-economic development of Nigeria. The scheme aims to achieve these goals through the provision of long-term finance to agricultural businesses and SMEs at a single-digit interest rate. To participate in the scheme, banks must meet certain criteria, such as being licensed by the CBN to provide banking services in Nigeria, having a sound risk management system, and meeting minimum capital requirements. Borrowers seeking to access funds through the AGSMEIS must be involved in agricultural or SME activities. The due diligence process involves several steps, including: 1. Applicable entities can apply for funding from the scheme by submitting an application form along with relevant documents (e.g., business plan, financial statements, etc.) to the CBN's Development Finance Department. 2. The CBN will review the submitted applications and determine their eligibility for the scheme. 3. If deemed eligible, the application will be forwarded to the Bankers' Committee-appointed Board of Trustees for a thorough risk appraisal and final approval. 4. Once approved, the funds will be released to the qualifying entities (agricultural businesses or SMEs) by the CBN through their respective participating banks. 5. The participating banks will then provide the required long-term finance to the approved entities at a single-digit interest rate. In summary, the Agri-Business/Small and Medium Enterprises Investment Scheme (AGSMEIS) is an initiative by Nigerian banking institutions to promote and support agricultural businesses and small and medium enterprises through the provision of long-term financing at a competitive and affordable single-digit interest rate. The process involves several steps, including submitting an application along with relevant documents for funding and following the CBN's guidelines in the application process."