The Central Bank of Nigeria (CBN) via a circular dated March 16, 2020 with reference number FPR/DIR/GEN/CIR/07/049, introduced the Guidelines for the implementation of the N50 Billion Targeted Credit Facility (the "Facility") (the "Guidelines") as a stimulus scheme to support households and Micro, Small and Medium Enterprises (MSMEs) affected by the COVID-19 pandemic. The objective of this scheme is to cushion the adverse effects of the COVID-19 pandemic on households and MSMEs in Nigeria; support households and MSMEs whose economic activities have been significantly disrupted by the COVID-19 pandemic; and to stimulate credit to MSMEs to expand their productive capacity through equipment upgrade, and research and development.


According to the Guidelines, the eligible persons for this Facility are households and existing enterprises with verifiable evidence of livelihood adversely impacted by COVID-19, and enterprises with bankable plans to take advantage of opportunities arising from the COVID-19 pandemic.

The scheme which is to be financed from the Micro, Small and Medium Enterprises Development Fund (MSMEDF) will cover activities such as: Agricultural value chain activities, hospitality (accommodation and food services), health (pharmaceuticals and medical supplies), airline service providers, manufacturing/value addition, trading and any other income generating activities as may be prescribed by the CBN. An important factor to note is the fact that this Facility attracts an interest rate of 5% per annum (all inclusive) where repayments on the Facility is made on or before February 28, 2021. The rate will however increase to 9% per annum (all inclusive) as from March 1, 2021.

Eligible households or MSMEs and corporate entities interested in applying for this Facility are required to submit applications directly to NIRSAL Microfinance Bank (NMFB) which is the participating financial institution for the Scheme. Such eligible persons must also provide clear evidence of the adverse impact of the COVID-19 pandemic on them or their businesses.


The amount to be disbursed may differ, depending on the different categories of recipients. For SMEs, the amount is subject to a maximum of N25million and this amount will be determined based on the activity, cash flow and industry/segment size of beneficiary, whilst households can access a maximum of N3million. Furthermore, working capital will be a maximum of 25% of the average of the previous 3 years' annual turnover (where the enterprise is not up to 3 years in operation, 25% of the previous year's turnover will suffice) and its tenor will be a maximum period of one year, with no option of rollover. Term facilities on the other hand will have a maximum tenor of not more than 3 years with at least, one-year moratorium. The repayment of this Facility will be made on installment basis, subject to the nature of the enterprise and the agreed repayment schedule/work plan. Regardless, the final exit date of the scheme is 31st December 2024.


The collateral to be provided by beneficiaries under the program will be determined by NIRSAL MFB, but may include any one or more of the following:

  1. Moveable asset(s) duly registered on the National Collateral Registry (NCR);
  2. Deposit of title documents, in perfectible state;
  3. Deed of Debenture (for stocks) in perfectible state;
  4. Irrevocable domiciliation of proceeds;
  5. Two (2) acceptable Guarantors;
  6. Personal Guarantee of the promoter of the business;
  7. Life Insurance of the Key-Man, with NMFB noted as the First Loss Payee; and
  8. Comprehensive Insurance over the asset.


This is indeed a commendable development and will substantially cushion the harsh economic effects of the COVID-19 pandemic. However, the Guidelines are not specific on the concept of eligibility for this Facility. For instance, it is not clear as to what would constitute verifiable evidence of the adverse effects of Covid-19 on the applicants. Nonetheless, one can safely argue that it may be sufficient for an applicant to submit its books of accounts showing its earnings and losses before and after the COVID-19 outbreak. Where a significant decline in revenue (including manpower) is shown, it may suffice as proof of the adverse effects of Covid-19 on the business of the applicant. For households, the proof of the adverse effects of Covid-19 may be evidenced by presenting the bank statement (if any) of the head(s) of the applicant house hold.

Furthermore, the decision of the CBN to include movable assets duly registered with the National Collateral Registry established under Secured Transactions in Movable Assets Act of 2017 (the "Act") is highly commendable. Clearly, the target of the intervention encompasses those who do not own immovable assets. Accordingly, small businesses can, amongst other things, use their account receivables as collateral as provided in section 63 of the Act.

We also believe that this scheme can ride on the back of the Trader-moni Loan Programme that the Federal Government of Nigeria already has in place. The Trader-moni initiative is a technology driven initiative that enables beneficiaries to receive funds through a mobile wallet funded by the Bank of Industry. Upon receipt of the funds, the beneficiaries can transfer the fund to their bank accounts or withdraw the funds through mobile money agents. Small businesses that are already beneficiaries of the Trader-moni scheme can utilize their receivables from the Trader-moni scheme as collateral for this Facility.

If well managed and implemented, this scheme will not only mitigate the severe effects of the COVID-19 pandemic on the MSMEs and individuals but will also rejuvenate business activities in Nigeria expeditiously.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.