Thursday, October 21, 2021 / 2:00 PM / CBN / Header Image Credit: Ecographics

1.   Introduction

TheCentral Bank of Nigeria, pursuant to the CBN Act, 2007 and as part of itspolicy measures to address rising youth unemployment and underemployment,developed the Tertiary Institutions Entrepreneurship Scheme (TIES), inpartnership with Nigerian polytechnics and universities to harness thepotential of graduate entrepreneurs (gradpreneurs) in Nigeria. The Scheme isdesigned to create a paradigm shift among undergraduates and graduates from thepursuit of white-collar jobs to a culture of entrepreneurship development foreconomic development and job creation. The Scheme thus aims to provide aninnovative financing model that will create jobs, enhance the entrepreneurialecosystem and support economic growth and development.

TheGuidelines outlines the operational modalities for the Scheme.

2.   Objectives of the Scheme

Thebroad objective of the Scheme is to enhance access to finance by undergraduatesand graduates of polytechnics and universities in Nigeria with innovativeentrepreneurial and technological ideas. Other specific objectives of the Schemeinclude:

1. Providean enabling environment for co-creation, mentorship and development ofentrepreneurial and technological innovations;
2. Fasttrack ideation, creation and acceleration of a culture of innovationdrivenentrepreneurship skills among graduates of polytechnics and universities inNigeria; iii. Promote gender balance in entrepreneurship development throughcapacity development and improved access to finance; iv. Leapfrogentrepreneurial capacity of undergraduates and graduates for entrepreneurshipand economic development in partnership with academia and industrypractitioners; and v. Boost contribution of non-oil sector to the nation's GDP.

3.   Focal Targets

In order to ensure that the Scheme achieves its desiredobjective and targetss, the focal targets under the Scheme shall include thenumber of: i. Gradpreneur-led innovative start-ups and businesses with accessto finance under the Scheme - 25,000 annually; ii. Sustainable jobs created bygradpreneur-led businesses financed under the Scheme - 75,000 annually; iii.Female-gradpreneurs financed as a percentage of total projects financed underthe Scheme - 50 per cent per annum; iv. Agropreneurs financed as a percentageof total projects financed under the Scheme - 40 per cent per annum; v.Creative entrepreneurs financed as a percentage of total projects financedunder the Scheme - 20 per cent per annum; vi. Techpreneurs financed as apercentage of total projects financed under the Scheme - 20 per cent per annum;and vii. Other gradpreneurs financed as a percentage of total projects financedunder the Scheme - 20 per cent per annum.

4.   Eligible Activities

Activitiesto be covered under the Scheme shall include innovative start-ups and existingbusinesses owned by graduates of Nigerian polytechnics and universities in thefollowing areas:

1. Agribusiness - production, processing, storageand logistics;
2. Information technology - application/softwaredevelopment, business process outsourcing, robotics, data management;
3. Creative industry - entertainment, artwork,publishing, culinary/event management, fashion, photography, beauty/cosmetics;
4. Science and technology - medical innovation,robotics, ticketing systems, traffic systems, renewable energy, wastemanagement; and
5. Anyother activity as may be determined by the CBN from time to time. 

Note:Priority will be given to innovative entrepreneurial activities with highpotentials for export, job creation and transformational impact.

Tradingactivities shall not be eligible for financing under the Scheme.

5.    Funding

The take-off capital will be sourced from both theAgribusiness / Small and Medium Enterprise Investment Scheme (AgSMEIS). 6.Focal Components of the Scheme The Scheme shall be implemented through three(3) components: i. Term Loan Component; ii. Equity Investment Component; andiii. Developmental Component 6.1 Term Loan Component Graduates of Nigerianpolytechnics and universities shall be eligible to participate under the TermLoan Component, which shall be implemented as detailed below:

6.1.1 Eligibility Criteriafor Participation

Applicantsunder the Scheme shall be graduates of Nigerian polytechnics and universitieswith:

1. Firstdegree certificate (BSc/HND/ or its equivalent);
2. NationalYouth Service Certificate (NYSC) discharge or exemption certificate;
3. Certificateof Participation issued by polytechnics and universities evidencingentrepreneurship training; and
4. Notmore than 7 years post-NYSC.

6.1.2 Other Features

1. Focusshall be on both greenfield (new) and brownfield (existing) projects in ratio40:60, respectively.
2. Topromote gender equality, 50 per cent of the Term Loan Component of the Schemeshall be earmarked for female-led or -owned projects.
3. Facilitiesaccessed under the Term Loan Component shall be revolving, as upon fullrepayment, beneficiaries shall be eligible to apply for additional and orincreased funding to ensure sustainability of financing support to projects.
4. Thefacility shall be disbursed in tranches and subject to approved terms and milestones.
5. Thetenor of projects financed under the Scheme shall be determined in relation toits cash flow and life of the underlying collateral.
6. Theapplicants.
7. Allmovable assets financed under the Scheme or used as collateral to secure theloan shall be registered with the National Collateral Registry (NCR).
8. Risksharing (including recoveries) shall be in ratio 80:20 between the Central Bankof Nigeria and the PFI for the amount in default after all recoveries have beenmade.
9. In theevent of three (3) consecutive monthly repayment defaults by any beneficiary,the CBN and PFI shall review the repayment schedule with the beneficiary withrecovery notification issued to that effect.
10. Beneficiariesof other CBN's interventions shall be eligible to participate under the Schemeupon full repayment of amount outstanding under the other earlier accessedintervention facility.
11. Thisfacility could be used for the refinancing of existing projects subject toManagement's special approval.

6.1.3 Transaction Dynamics

i. Prospective applicants shallattend mandatory entrepreneurship trainings with their respective Nigerianpolytechnics and universities and certificates of completion issued totrainees;

ii. Applications shall be submittedon a dedicated online portal (https://cbnties.com.ng), with copies ofrelevant documents attached for review, which shall include:

a. First degree certificate(BSc/HND/or its equivalent);

b. National Youth ServiceCertificate (NYSC) discharge or exemption certificate;

c. Certificate of Participationissued by polytechnics and universities evidencing entrepreneurship training;

d. Letter confirming theapplicants' deposit of required certificates from PFI;

e. Projected Statement of Income,Statement of Affairs, and cash flow projections for start-ups and businesseswith less than 3 years of operations;

f. Business plan outlining details,financials and economic benefits of the projects.

iii. Submitted applications andcertificates shall be transmitted directly to the PFI for evaluation anddocumentation;

iv. The portal shall be designed toallow the applicants select its PFI of choice, which shall receive copies ofthe submitted applications for due diligence checks and subsequent disbursementand monitoring of financed projects;

v. The PFI shall provide to theapplicants and forward to the CBN, the following documents:

a. Copies of duly executed offerdocuments between the bank and the loan applicants;

b. At least one (1) Credit Reportof the promoter/entrepreneur;

c. Duly signed Global StandingInstruction (GSI); and

d. Proposed schedule of funddisbursement and repayment;

vi. The PFI shall register thesubmitted certificates with the National Collateral Registry (NCR);

vii. Upon approval of applicationby the CBN, the approved sum shall be released to applicants' PFIs of choice inaccordance with the approved disbursement schedule;

viii.The PFI shall disburse thereleased funds into the applicants' accounts within five (5) working days withno restriction on access, upon compliance with the terms for withdrawal;

ix. The PFI shall register allfinanced equipment under the Scheme with the National Collateral Registry(NCR); and

x. The location of the businessshall be mapped or tagged for monitoring and evaluation purpose.

6.1.4 Repayment

Interest payment and principalrepayment shall be made on monthly or quarterly basis by the obligor dependingon the established cash flow cycle and in line with the approved repaymentschedule.

6.1.5 Participating FinancialInstitutions

The PFIs under this Schemeshall be deposit money banks (DMBs) and other financial institutions as may beapproved by the CBN.

6.2 Equity InvestmentComponent

1. The Equity Investment Componentshall be in the form of injection of fresh capital for start-ups, expansion ofestablished businesses or reviving of ailing entrepreneurial businesses. TheComponent shall be implemented under the AgSMEIS Equity window, withapplication for participation submitted on https://cbnties.com.ng.
2. The Bankers' Committee Trust shall hold the equity on behalf ofthe AgSMEIS Fund.
3. The equity investments shall be in enterprises operating withinthe eligible focal areas.

6.2.1 Investment Limit

The investment limit shall besubject to the limit prescribed in the AgSMEIS Guidelines.

6.2.2Investment Period

This shall be as follows:

1. Investment made shall be for a maximum period of ten (10) years(not exceeding December 31, 2031).
2. There shall be a 3-year lock-in period before exit in order toencourage value creation and boost managerial capacity of businesses.

6.3 Developmental Component

The Developmental Componentshall be disbursed in the form of grants to Nigerian polytechnics anduniversities in a national biennial entrepreneurship competition. Thecompetition is aimed at raising awareness and visibility of high-impactentrepreneurial/technological ideas among undergraduates,promoteentrepreneurial talent hunts in Nigerian polytechnics and universities, as wellas encourage innovations that are commercially viable and with transformationalimpact.

The Developmental Componentshall also be utilized for the general development of the MSME segment in thefollowing areas:

1. Finance the development of the award-winning innovativeentrepreneurial/technological ideas;
2. Research and development of high-impact technological innovationsand projects; and iii. Support the development of financial infrastructure tofacilitate the entrepreneurship in Nigerian polytechnics and universities.

6.3.1. Award of Grants

Five (5) top Nigerianpolytechnics and universities with the best entrepreneurial pitches/ideas shallbe awarded as follows:

• First place - N150.0 million;
• Second place - N120.0million;
• Third place - N100.0 million;
• Fourth place - N80.0 million;and
• Fifth place - N50.0 million.

The grants shall be in thefollowing areas:

1. Agribusiness;
2. Information technology;
3. Creative industry; and
4. Science and technology.

The Bank shall constitute aBody of Experts (BoE) from the private and public sector for the biennialregional and national entrepreneurship competitions to evaluate entrepreneurialand technological innovations submitted by Nigerian polytechnics anduniversities. The Body of Experts (BoE) shall recommend projects with highpotential and transformational impact for the grant award.

The composition of the BoEshall be as detailed below:

1. Four (4) representativesfrom the Bankers' Committee;
2. One (1) representative fromconsulting industry;
3. One (1) nominee fromSMEDAN;
4. One (1) nominee from theNUC;One (1) nominee from theNBTE; and
5. One (1) nominee from theCBN (Secretary).

TheChair of the BoE shall be appointed by the CBN from the Banker's Committee.

Participationunder the Developmental Component shall be restricted to undergraduates ofNigerian polytechnics and universities.

6.3.2Modalities

i.Interested Nigerian polytechnics and universities shall apply to participate inthe national biennial entrepreneurship competition on a dedicated online portal(https://cbnties.com.ng), outliningbrief details of the project, potential impact and evidence of originality ofproject;

ii.The submitted applications shall be evaluated by the BoE through engagementsthat showcase undergraduates competing by pitching entrepreneurial andtechnological innovations at regional levels, with finalists proceeding to thenational event for final consideration and ranking by the BoE;

iii.The showcasing programmes shall be broadcasted for four (4) weeks on platformssuch as social media and national television stations (at least two) to helphighlight the value of entrepreneurship and change attitudes, as well as socialperceptions about entrepreneurship;

iv.Final top five (5) entrepreneurial and technological innovations at thenational level shall be awarded the grant on recommendation of the BoE; and

v.The Grant shall be disbursed in tranches of 55:45 ratio directly to a dedicatedaccount opened for the purpose of the grant by the Nigerian polytechnics anduniversities, subject to approved milestones.

7.Stakeholders and Responsibilities

Theresponsibilities of the stakeholders shall include:

7.1Central Bank of Nigeria (CBN)

TheCentral Bank of Nigeria shall:

i.Articulate clear Guidelines for the implementation of the Scheme;

ii.Partner with the private sector and Nigerian polytechnics and universities inthe development of the online application portal, constituting the BoE andorganising the national entrepreneurship contest;

iii.Approve and disburse loan request to successful beneficiaries through theirPFIs;

iv.Engage independent monitors to carry out periodic verification and monitoringprojects financed;

v.Conduct project impact assessment in conjunction with the Monitoring Team andother relevant stakeholders;

vi.Sensitize stakeholders and the general public on the activities of the Scheme;

vii.Facilitate meetings of the BoE; and

viii.Review the Guidelines from time to time

7.2Participating Polytechnics and Universities

Participatingpolytechnics and universities shall:

i.Develop a curriculum or programme for the training or retraining of

graduatesin entrepreneurship development;

ii.Issue certificates of completion to its graduates evidencing participation

inthe entrepreneurship development training programmes;

iii.Authenticate applicants' first-degree certificates;

iv.Develop a recourse platform for registering, digitization and offboarding ofsubmitted certificates under the Scheme;

v.Create a central platform for digitizing submitted certificates and provide afeedback loop with PFIs on collateralised certificates;

vi.Provide ideation, creation and acceleration hubs for undergraduates toactualise their entrepreneurial ideas;

vii.Present entrepreneurial projects for participation in the regional and nationalcontests under the Grant Component;

viii.Carry out all relevant due diligence and plagiarism checks on allentrepreneurship projects presented for the regional and national contests;

ix.Forward list of all trained and certified graduates on entrepreneurship to theCBN;

x.Facilitate the actualisation/implementation of the winning projects within thecommunity it was projected to be implemented;

xi.Render periodic status reports on the winning projects as may be specified bythe CBN from time to time; and

xii.Provide awareness and training sessions for undergraduates on entrepreneurshipdevelopment.

7.3Participating Finance Institutions

ThePFIs shall:

i.Participate in the development of the online application portal to facilitatesubmission of applications by prospective beneficiaries for the term loan;

ii.Carry out all relevant due diligence on applicants and submitted certificatesunder the term loan component of the Scheme;

iii.Provide at least one credit report on promoter(s) for all projects;

iv.Register all movable assets accepted or financed, including submittedcertificates, as collaterals for the loan with the National Collateral Registry(NCR);

v.Issue a letter evidencing the registration of the applicant's certificates withthe NCR;

vi.Forward verified and approved applications to the CBN for further processingand approval;

vii.Disburse released funds to beneficiaries' accounts within 5 working days ofreceipt;

viii.In line with 8.3(vii), return undisbursed funds to the CBN after a period of 14working days of receipt of the funds;

ix.Remit monthly or quarterly interest and principal repayments to the CBN within5 working days of the subsequent month depending on the approved repaymentschedule;

x.Collaborate with the CBN in engaging independent monitors to carry out periodicverification and monitoring projects financed;

xi.The PFI shall remit interests and principal repayments received to the Schemeon monthly or quarterly basis depending on the established cash flow cycle andin line with the approved repayment schedule;

xii.Render periodic returns as may be specified by the CBN from time to time;

xiii.Discharge all movable collaterals used to securitize the loan on the NationalCollateral Registry within one month of repayment, and notify the customeraccordingly; and

xiv.Comply with the Guidelines of the Programme.

7.4Beneficiary

Thebeneficiary shall:

i.Apply on the dedicated online portal and provide all requisite documentation tosupport the application;

ii.Present for verification original copies of submitted certificates anddocuments;

iii.Submit business proposal and other documentation requirements

iv.Adhere strictly to the terms and conditions of the Scheme and avoid any formsof plagiarism in the project idea;

v.Utilize the funds for the purpose for which it was granted;

vi.Present the business and its location for mapping/tagging, as well asmonitoring and evaluation;

vii.Maintain accurate and up-to-date records available for inspection/verificationby the CBN and Monitoring Team; and

viii.Adhere strictly to the terms and conditions of the Scheme.

8.Verification/Monitoring of Projects

Projectsfinanced under the Scheme shall be monitored by independent monitors jointlyengaged by the CBN and PFI.

9.Discontinuation of Credit Facility

i.Whenever a loan is repaid or the Scheme is otherwise discontinued, the PFIshall return the fund to the CBN.

ii.The PFI shall discharge the movable collaterals from the National CollateralRegistry (NCR).

10Dispute Resolution

Alldisputes shall be resolved in line with the Consumer Protection Regulations ofthe Central Bank of Nigeria.

11.Exit Date

TheScheme shall be operated for a period of 10 years in the first instance (notexceeding 31st December 2031) depending on the complexity of the project.

12.Infractions and Penalties

Thefollowing, among others, shall constitute infractions under the

13.Management of the Scheme

TheScheme shall be managed by the Development Finance Department of

theCentral Bank of Nigeria.

a.The CBN reserves the right to reject an application from any applicants thatdoes not meet the requirements of the Guidelines.

b.The CBN may amend this Guidelines from time to time and may waive any part ofthis Guidelines upon the approval of the Governor.

14.Enquiries and Returns

Allenquiries and returns should be addressed to:

TheDirector,

DevelopmentFinance Department,

CentralBank of Nigeria,

CorporateHeadquarters

CentralBusiness District, Abuja.

RelatedNews

1.      CBN Issues Guidelines on Disposal of Non-PermissibleIncome

2.     CBN Issues Revised Regulatory Framework for BVNOperations and Watchlist

3.     The Evolution of the Nigerian Monetary System throughCentral Bank Digital Currencies

4.     Observance of Due Diligence in the Processing of ForeignExchange Transactions

5.     CBN Categorically Denies and Strongly Condemns Peddlersof Rumor on Dom Account Holdings

6.     CBN Directs Banks and Payment Service Providers toDisaggregate Bulk Payment

7.     CBN Directs Banks to Publish Details of Defaulters of theCBN Policy on Sale of Forex

8.    CBN Prohibits Microfinance Banks from Forex Transactions

9.     CBN Issues Exposure Draft of the Risk-BasedCyber-Security Framework and Guidelines for OFIs

10.  Analysing CBN's Guidelines for Licensing and RegulatingPayment Service Holding Companies

11.  CBN Sets N10bn Capital Base for Credit GuaranteeCompanies