Nigeria’s apex bank, the Central Bank of Nigeria (CBN), has for the second time in 3 months upgraded policies to force commercial banks to fund enterprises across the country. The bank issued a new directive today asking deposit money banks (DMB) to push an extra 5% of total deposit as loan to SMEs, retailers, mortgage, and consumer credits. This raises the total loan-to-deposit ratio required of the banks to 65% from an earlier 60%.
The new directive aims to help entrepreneurs and players across the real sectors (non-financial and non-governmental sectors that produce goods and services for profit) gain access to funding to scale activities, increase productivity and boost business expansion. These, it is believed, will reduce the pressure on government to create jobs and subsidize hailing sectors in the face of renewed threat to oil glut.
Overall, serving as moderator and facilitator of conducive environment for human capital and businesses to flourish, government, through core agencies such as the central bank, is beginning to play the active role of policy driver and stimulant.
According to CBN, the upward review of the ratio of lending is “to encourage the SMEs, retail, mortgage and consumer lending”. Therefore, there is hardly a better time for young people with viable business proposition in the areas of technology, fast moving consumer goods, hair-dressing, film-making, fashion design, agriculture, mobility and more to dream of scaling by engaging the bankings.
Here are two critical steps to attaining that:
1. Write a proposal – Your proposal has to be brief but rich in content; specifying what your business does (or want to do), processes, target market and size, location of target, proven analytics and data supporting viability of business, break-even plan, and core partnership amongst other things.
2. Search for a bank that focuses on your industry – Make sure you are not approaching the wrong financiers. GTBank, Zenith Bank, Access Bank, Ecobank have different focuses. While one focuses on supporting the creative industry, another may choose to support the entertainment industry;and others software, agriculture etc. Approaching the right bank will boost your chances.