Tel: 09-46237401 E-mail:fprd@cbn.gov.ng FPRD/DIR/GEN/CIR/07/031 July 1, 2019 CIRCULAR TO ALL DEPOSIT MONEY BANKS MODALITIES FOR THE IMPLEMENTATION OF THE CREATIVE INDUSTRY FINANCING INITIATIVE (CIFI) The Central Bank of Nigeria (CBN), in collaboration with the Bankers' Committee, has introduced the Creative Industry Financing Initiative (CIFI) to improve access to long-term low-cost financing for entrepreneurs and investors in the Nigerian creative and information technology (IT) sub-sectors, as part of efforts to boost job creation in Nigeria, particularly among the youth.

In furtherance of the above, the CBN hereby issues the modalities for the implementation of the initiative. These modalities may be accessed via the Bank's website www.cbn.gov.ng. Further enquiries on the modalities may be referred to the Director, Development Finance Department, Central Bank of Nigeria, Abuja.

SEPH M. GANA FOR: DIRECTOR, FINANCIAL POLICY AND REGULATION DEPARTMENT CENTRAL BANK OF NIGERIA Financial Policy and Regulation Department Central Business District P.M.B. 0187 Garki, Abuja.

central bank of nigeria

Modalities For The Implementation Of The Creative Industry Financing Initiative

Version: 31 May 2019 Table of Content

Glossary	.
1. Introduction .	.	3
2. Objectives of CIFI .	.	3
3. Activities covered under CIFI	3
4, Funding	,	.	.	4
5. Operational Features of CIFI	.	4
6. Transaction Dynamics	.	7
7. Participating Financial Institutions	8
8. Monitoring and Evaluation	·	8
9. Discontinuation of Credit Facility.	8
10.Infractions and Penalties .	.	8
11.Amendments	.	.	8
12.Enquiries and Returns	.	8
Appendix
Definition of Terms	·	.	9
Abbreviation and Acronyms .

10

1. Introduction

The Central Bank Nigeria (CBN), in collaboration with the Bankers' Committee, as part of efforts to boost job creation in Nigeria, particularly among the youth, recently introduced the Creative Industry Financing Initiative (CIFI) with a view to improving access to long-term low-cost financing by entrepreneurs and investors in the Nigerian creative and information technology (IT) sub-sectors.

In furtherance to the above, the CBN hereby issues modalities and transaction dynamics for the seamless implementation of the initiative.

2. Objectives Of Cifi

The objectives of the Initiative are: i.

Improve access to low-cost and sustainable financing by entrepreneurs and investors in the Nigerian creative and information technology (IT) subsectors; ii.

Boost job creation, particularly among the youth; iii.

Harness the entrepreneurial potentials of youth within the Nigerian creative and information technology (IT) sub-sectors for economic development; and iv.

Complement other development finance initiatives of the CBN to accelerate financial inclusion.

3. Activities Covered Under Cifi

Eligible activities under the initiative are: i .

Existing enterprises in the creative industry; ii.

Start-ups engaged in the creative industry; and iii.

Students of higher institutions engaged in software development.

3.1 Verticals (Focal Sub-Sectors)

The verticals for financing under the eligible activities shall include: i. Fashion ii. Information Technology 3 | P a g e iii. Movie iv. Music

Verticals	Target Markets
Fashion	.	Designers
Information	-	Information Technology
Technology	-	Student Software Development Loan
Movie	Movie Distribution
	-
	-	Movie Production
Music	�	Music Production (Musicians)
	.	Music Distribution

4. Funding

The initiative shall be funded from the Agri-Business Small, and Medium Enterprises Investment Scheme (AGSMEIS), an initiative of the Bankers' Committee, with a seed fund of N22.9 billion appropriated as follows: 4.1 Student Software Development Loan

N1.0 billion 4.2 Information Technology

N5.5 billion 4.3 Movie Production

N3.0 billion disaggregated into: .

4.3.1 Production

N1.5 billion

N1.5 billion 4.4 Movie Distribution

N4.0 billion 4.5 Music u N5.4 billion 4.6 Fashion

N4.0 billion

5. Operational Features Of Cifi

The key features of the CIFI include: 5.1

Features	Student Software	Movie Production	Movie Distribution
Development Loan
Single	N3.0 million	N50.0 million	N500.0 million
Obligor Limit	9.0% p.a. (all	9.0% p.a. (all
Interest Rate	9.0% p.a. (all inclusive)	inclusive)	inclusive)
4	P a g e

Software Development and Movie 4.3.2 Equipment Financing

Tenor	3 years	10 years	10 years
9 months from date of	24 months from date	24 months from date
Moratorium	loan disbursement	of loan disbursement	of loan disbursement
Repayment	Monthly	Quarterly	Monthly
	- Minimum Equity
· Minimum Equity	- Minimum Equity
Contribution - 0%	Contribution -
	Contribution - 30%	30%
· University degree	· Legal mortgage
Security	certificate	.	Legal mortgage
Arrangement	- All asset debenture
- NYSC certificate	.	All asset
	debenture
	u	Credible Guarantor
- Credible Guarantor	o	Personal Guarantee	.	Personal
- Personal Guarantee	Guarantee
- Must gain admission	- Minimum of three
into a training	- Minimum of three	(3) years relevant
organisation that has	(3) years relevant	experience
job placement	experience
contracts	- No bad credit
	- No bad credit	history with CRMS
Other	- No bad credit history	history with CRMS	or any commercial
Conditions	with CRMS or any	or any commercial	banks in Nigeria
commercial banks in	banks in Nigeria
Nigeria	- Preference for
	- Preference for areas	areas with low
- Preference for areas	with low cinema	cinema
with low IT	penetration	penetration
penetration	- Minimum Equity
- Minimum Equity	- Minimum Equity	Contribution -
Contribution - 0%	Contribution - 30%
Funding	30%
Structure	· DMB (Term Loan) -	· DMB (Term Loan) -	· DMB (Term Loan)
100%	70%	- 70%
In phases in	In phases in	In phases in
Disbursement	accordance with agreed	accordance with	accordance with
milestones	agreed milestones	agreed milestones
	From the proceeds of	From the proceeds of
From the proceeds of	movie tickets at the	movie tickets at the
Repayment	software sale or patent	box office and other	box office and other
Source	usage	channels of	channels of
	distribution	distribution

5.2	Fashion, IT and Music
Features	Fashion	Information	Music
	Technology
o	Equipment	o	Equipment
Monetization	.	Equipment purchase	purchase	purchase/rentals
(To be	.	Rental/service fees	.	Rental/service	.
financed)	Rental/service
fees	fees
	9.0% p.a. (all	9.0% p.a. (all
Interest Rate	9.0% p.a. (all inclusive)	inclusive)	inclusive)
Tenor	10 years	10 years	10 years
	36 months from
36 months from date of	36 months from date
Moratorium	date of loan
loan disbursement	of loan disbursement	disbursement
Repayment	Quarterly	Quarterly	Quarterly
	- Minimum Equity
- Minimum Equity
- Minimum Equity	Contribution -
Contribution - 20%
Contribution - 20%	20%
- Mortgage
- Mortgage debenture	- Mortgage
debenture
Security	debenture
· Legal mortgage
Arrangement	- Legal mortgage	· Legal mortgage
- Lien on stock of trade	- Lien on stock of
and items of	- Lien on stock of
trade and items of
equipment	trade and items
equipment	of equipment
	· At least three (3)
- At least three (3)	- At least three (3)	referrals from
referrals from	referrals from	recognised
recognised sponsors	recognised	sponsors or
or bodies or	sponsors or bodies	bodies or
associations.	or associations	associations
Other	· Minimum of three (3)	- Minimum of three	- Minimum of three
(3) years relevant
Conditions	years relevant	(3) years relevant
experience	experience	experience
· No bad credit history	- No bad credit	- No bad credit
with CRMS or any	history with CRMS	history with
commercial banks in	or any commercial	CRMS or any
Nigeria	banks in Nigeria	commercial banks
	in Nigeria
	- Minimum Equity
- Minimum Equity	- Minimum Equity
Funding	Contribution -
Contribution - 20%	Contribution - 20%
Structure	20%
· DMB (Term Loan) -	· DMB (Term Loan) -	· DMB (Term Loan)
6	Page

80%	80%	- 80%
In phases in	In phases in
In phases in accordance
Disbursement	accordance with	accordance with
with agreed milestones	agreed milestones	agreed milestones
From the proceeds of	From the proceeds
Repayment	From proceeds of the	sales or income form	of music record sale
Source	business	services provided	or shows

6. Transaction Dynamics

i.

The prospective applicant approaches any bank of his/her choice with a business plan or statement detailing how much is needed for his/her business proposal.

ii.

The bank provides the applicant with the documentation requirements for accessing any of the verticals.

iii.

The documentation requirements shall be as acceptable by the respective bank for credit requests by its customers.

iv.

The bank carries out due diligence of the application and documentation submitted.

v.

Successful applicants are issued offer letters, which shall have therewith repayment schedules in accordance with the business dynamics.

vi.

The successful applicants shall accept the offer, as well as, meeting all conditions specified in the offer letter precedent to draw down.

vii.

The bank forwards successful applications with copies of the offer letter to the Director, Development Finance Department, Central Bank of Nigeria, for consideration and release of aggregate facility amount to the bank for onlending to successful applicants.

viii.

The bank disburses funds to successful applicants within ten (10) days of receipt of funds from the CBN.

.· ".

ix.

The bank bears the credit risk and shall be responsible for the monitoring the performance of the facility.

7. Participating Financial Institutions (Pfis)

All deposit money banks (DMBs) shall be eligible to participate under the initiative.

8. Monitoring And Evaluation

There shall be regular joint monitoring and evaluation of financed projects by the CBN and respective PFIs. Reports of the exercise shall be submitted to the Director, Development Finance Department.

9. Infractions And Penalties

The infractions and penalties shall be as specified in the AGSMEIS Guidelines.

10. Discontinuation Of Credit Facility

Whenever a loan is repaid or the facility is otherwise discontinued, the PFIs shall advise the CBN immediately, giving particulars of the credit facility. Any outstanding amount under the facility is to be refunded to the AGSMEIS Fund Account within seven (7) days of discontinuation.

11. Amendments

These modalities shall be subject to review from time to time as may be deemed necessary by the CBN and the Bankers' Committee.

12. Enquiries And Returns

All enquiries and returns should be addressed to: The Director Development Finance Department Central Bank of Nigeria, Corporate Headquarters; Central Business District, Abuja.

Telephone No: 234-09-4623860 Development Finance Department May 2019 8 | Page .· ' .

Appendix

Definition of Terms

Agribusiness

Agribusiness in the context of these guidelines shall be a business involved in any of the agricultural value chain including production, processing, storage and logistics.

Participating Financial Institutions (Pfis)

Any Deposit Money Bank or Microfinance Bank licensed by the Central Bank of Nigeria to provide banking services in Nigeria.

Abbreviations And Acronyms

AGSMEIS Agri-Business Small, and Medium Enterprises Investment Scheme

CBN	Central Bank of Nigeria
CIFI	Creative Industry Financing Initiative
CRMS	Credit Risk Management System
DMB	Deposit Money Bank
PFI	Participating Financial Institution

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