It’s a new dawn for the creative industry as the Central Bank of Nigeria makes funds available for creative persons, who genuinely seek financing to grow their businesses under its Creative Industry Funding Initiative.
Just like it did to farmers under its Anchor Borrowers’ Programme (ABP), where rice farmers got cheap capital to boost their production capacities, leading to Nigeria becoming one of world’s largest producers of rice, the Central Bank of Nigeria, has launched a financing programme for the creative industry in Africa’s largest economy to enhance productivity and wealth creation.
The Creative Industry
The creative industry is adjudged one of the fastest growing in Nigeria and beyond. Statistics showed that the country’s creative industry accounts for 2.3 per cent (approximately N239 billion) of the nation’s GDP in 2016. It has however grown more than double the previous figures and continues to pose as the go-to sector to massively reduce the unemployment rate as well as creating a more robust economy.
“Nigeria has the largest economy in sub-Saharan Africa and its fast-growing tech, film and fashion sectors have become a strong exporter of culture,” the British Council said on its website.
Also, Nigeria’s culture and information minister Lai Mohammed said, “Our greatest strength lies in our creative industry, our music, and our films. That is one area we need to build on because that is one area we have a comparative advantage over many other countries.”
Nigeria’s creative industry is growing at an exponential rate with emerging talents in the fashion and film sector. But their chances of emerging from talents to creative entrepreneurs are quite slim due to the country’s harsh economic realities.
The country’s unemployment rate was at 23.1 per cent, from the previous rate of 18.8 per cent released in the third quarter of 2017, Nigeria’s National Bureau of Statistics said in December 2018.
Despite these challenges and even more, Nigeria’s creative industry is tipped to hold the key to reducing the growing unemployment rate and contribute to the nation’s economy. While the challenges are real, the opportunities in the creative industry remain limitless.
Operators in the industry might as well heave a sigh of relief as the CBN has taken it upon itself to make fund available to creative entrepreneurs to finance their dreams and grow their businesses.
The central bank, in collaboration with the Bankers’ Committee, as part of efforts to boost job creation in Nigeria, particularly among the youth, has developed a Creative Industry Finance Initiative (CIFI).
A circular recently published by the CBN disclosed that four key areas in the creative industry are targeted for financing under the scheme. They are fashion, information technology, movie production and music distribution. Software Engineering students can also access loan from the scheme for use in their creative ventures.
According to CBN, prospective beneficiaries are only required to prepare their business plan or statement on how much they want for their business and approach their bank for the facility.
“You can get a loan of up to N3 million for Software Engineering Student, N30 million for Movie Production business, N500 million for Movie Distribution business,” the CBN announced.
The facility covers rental/service fees for Fashion and Information Technology business and training fees, equipment fees, and rental/service fees for Music business.
The CBN added: “Go to any bank of your choice to access the fund. Tell your bank how much you need. Your bank will discuss your request and provide you the money.”
The maximum interest rate of nine percent per annum (all charges inclusive) is applicable to all loans with a period for the repayment of the loan ranging from three to 10 years, depending on the segment of the business.
For software engineering student loan, it is a maximum of three years to repay a loan while it takes up to 10 years for people in movie production and distribution and also fashion, information technology and music.
The creative industry in Nigeria is believed to have the potential to turnaround the economy, if given the right attention as the CBN and the banks are about to do under the CIFI scheme.
Although there are no precise data on the size of the Nigerian fashion market, the apparel and footwear market in sub-Saharan Africa is estimated to be worth $31 billion with the global apparel market valued at $3 trillion.
As of 2014, the film industry was worth N853.9 billion (about $5.1 billion) making it the third most valuable film industry in the world, behind the United States and India. It contributed about 1.4 per cent to Nigeria’s economy- this was attributed to the increase in the number of quality films produced and more formal distribution methods.
The Anchor Borrowers’ Programme, which was launched by President Muhammadu Buhari in 2015, has a primary objective to create economic linkage between smallholder farmers and reputable large-scale processors with a view to increasing agricultural output and significantly improving capacity utilisation of processors, targeted commodities of comparative advantage.
They include cereals, cottons, roots and tubers, sugarcane, tree crops, legumes, tomato, livestock among others.
Farmers under the scheme assessed loan at nine per cent per annum interest rate (all inclusive, pre and post disbursement). The fund was provided from the N220 billion Micro, Small and Medium Enterprises Development Fund (MSMEDF), facilitated by the central bank.
According to the CBN, in the agriculture sector, the Anchor Borrower Programme ensured that Nigeria moved from being a net importer of rice to becoming a major producer of rice, supplying key markets in neighbouring countries.
As at October 2018, it stated that a total number of 862,069 farmers, cultivating about 835,239 hectares across 16 different commodities, had so far benefited from the Anchor Borrowers programme, which had generated 2,502,675 jobs across the country.
Emefiele stated: “It is in light of the success of the Anchor Borrowers Programme with regards to cultivation of rice and maize that the Monetary Policy Committee, in its last meeting on November 21, 2018, recommended that the programme be applied to other areas such as palm oil, tomatoes and fisheries to mention a few,” he stated.
“Our efforts at supporting small scale farmers and SMEs are based on our awareness of the critical role they can play in supporting our economic recovery and growth, as well as in creating job opportunities for millions of Nigerians.
“So far, the CBN has through its MSME fund disbursed over N100billion to the sector, but we still feel a lot can be done. Under the auspices of the Bankers Committee, the sum of over N60billion has so far been set aside under the AGSMIES fund to fund Micro Small and Medium enterprises in the agriculture and manufacturing sectors of our economy.”
The CBN stated that it recognised that the greatest challenge confronting the MSMEs and local farmers was access to credit, and that to unlock the growth potential in the country; these groups must access funding seamlessly.
In response to this challenge, Emefiele said the CBN would in due course take action that would directly bring banking services to the rural communities through licensing of a national micro finance bank to be located in all local governments in Nigeria, through which credit could be channeled to the rural communities.
“We will continue to explore ways, in partnering with the fiscal authorities, on how we can best provide farmers and SMEs with the support they need to expand their operations,” he said.
While noting that many people were being employed by these entrepreneurs to support production of these goods as a nation, he said the country “must continue to encourage these businesses as they do more than just provide goods, they help to sustain the vitality of the communities in which they live and work.”