By Tony Obiechina, Abuja
The sum of Eleven million Euros has been approved by the German Government, the European Union (EU) and the Ford Foundation for the execution of the Nigeria Competitiveness Project (NICOP).
The project is four-year initiative commissioned by the German Ministry for Economic Cooperation and Development (BMZ) and co-funded by the EU under the West African Competitiveness envelope.
It is being implemented by Deutsche Gesellschaft fur Internationale Zusammenarbeit (GIZ) through the Pro-Poor Growth and Promotion of Employment in Nigeria (SEDIN).
NICOP is dedicated to supporting the key value chains of tomato, ginger, chili, leather and garment production in Nigeria to promote access to regional and international markets.
The project which commenced in August, 2018 is expected to terminate in July, 2022. Consequently, the promoters have organised a Validation workshop in Abuja on the framework/roadmap to establish a wholesale impact fund (WIIF) in Nigeria.
In a statement made available by the organisers on Thursday, the intervention became necessary because of the significant social-economic challenges that the country is presently facing.
The statement noted further, “Micro, Small and Medium Enterprises (MSMEs) that are the growth engine find it difficult to access capital. In recent years, governments, at national and sub-national levels have established local funds to give concessionary loans to enterprises.
“For example, the Lagos State Employment Trust Fund (LSETF) is a NGN25 billion fund created by the Lagos State Government in 2016 to provide accessible finance to MSMEs registered in Lagos State at single-digit interest rates, as low as 5% per annum; the Central Bank of Nigeria’s (CBN) Anchor Borrowers program is an NGN220 billion MSMEs Development Fund that provides loans at 9% per annum to smallholder farmers engaged in the production of selected commodities across the country.
“However, these funds are sector-specific, meaning that enterprises that fall outside their focus areas may not receive investments from them and the pool of funds is always very limited and much smaller than the demand for it. Lack of access to this sort of capital poses huge problems for social, impact and inclusive enterprises that require concessionary capital to scale and deliver greater impact.
“There is, therefore, a need to find innovative ways of creating impact funds, ideally, Naira denominated, that can consider smaller ticket sizes to support the growth of social, impact and inclusive enterprises and SMEs with market potentials for scale and large-scale impact in areas such as renewable energy, accessible/quality education, healthcare, affordable housing, climate- smart technologies, food and nutrition, safety and security with a special consideration for gender and sustainability.
“Hence, the National Advisory Board of Impact Investing in Nigeria, the Office of the Senior Special Assistant to the President on Sustainable Development Goals (OSSAP-SDGs), the Office of the Special Adviser to the President on Social Investments and the Federal Ministry of Finance, Budget and National planning with support from the Nigeria Competitiveness Project (NICOP, the EU and BMZ – German Cooperation Ministry – funded programme implemented by the German Development Cooperation – GIZ), the Impact Investors’ Foundation (IIF) in conjunction with the Ford Foundation and other stakeholders have come together to set up an initiative to establish an impact investment wholesaler fund in Nigeria”.
According to the statement, wholesaler impact investment fund is intended to be both an impact fund and a market builder dedicated to achieving measurable positive impact on people and the environment by providing catalytic financing to fund other intermediaries and social/impact entrepreneurs and MSMEs which draws in additional capital and supports the development of the impact investing ecosystem.
It disclosed that possible sources for wholesaler funds being considered for the project include, dormant accounts and unclaimed dividends; Dormant Investment; Public financial Institution; Government Spending; Institutional Investors among others.
The objectives of the workshop are to
*Present the draft framework/roadmap to stakeholders to discuss, validate and receive their feedback for a final robust and best in class document for the seamless set-up of a wholesaler impact investment fund in Nigeria;
*Identify stakeholders for collaboration to drive the implementation/operationalisation of the roadmap/establishment of the fund and participation in the WIIF;
*Agree on next steps, responsibilities and ownership.
At the end of the workshop, it is expected that a robust and world-class framework/roadmap is developed that will propel the establishment of WIIF in Nigeria; and that Stakeholders should understand WIIF better and be convinced of its relevance in solving the access to finance challenges faced by both MSMEs and social enterprises.
