The Federal Government of Nigeria on Monday disclosed that it is set to roll out the implementation of the “Guaranteed Off-take Scheme for MSMEs and Survival fund to designated sectors” recommendations, issued for supporting small businesses in the Nigeria Economic Sustainability Plan (NESP).
This is coming two months after the NESP was presented to President Buhari by the Economic Sustainability Committee (ESC), which he set up on March 30, 2020. The ESC chaired by the Vice President Osinbajo, presented the NESP report to the President on 11 June 2020.
According to NESP, Payroll support will establish the SME Survival Fund to sustain at least 500,000 jobs in 50,000 SMEs. While the Guaranteed Off-take Scheme for MSMEs is to safeguard 300,000 existing jobs in 100,000 MSMEs. The recommended timeline for these programs were 0 – 3 months.
Two months on, FG is yet to announce how the MSME support initiatives will be accessed. It however stated that the details on accessing the funds “will be unveiled soon, by the Implementation Committee.”
The committee will be chaired by the Minister of State for the Federal Ministry of Industry, Trade & Investment, Amb Mariam Katagum while the Vice Chair is Ibukun Awosika.
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Details about Guaranteed Off-take Scheme for MSMEs
According to the NESP, the purpose of the Guaranteed Off-take Scheme for MSMEs is to safeguard 300,000 existing jobs in 100,000 MSMEs and sustain local production. The scheme will function by government making arrangements to purchase specific priority products made by MSMEs such as such as processed food, Personal Protective Equipment, hand sanitisers, face-masks, face-shields, shoe covers, pharmaceuticals.
To ensure value for money the process for such supplies will be a bidding process. The scheme will ensure that small businesses do not fail and thus ensure that the jobs in the MSME sector are not lost to the global and national slowdown in economic activity.
Guaranteed Off-take Scheme for MSMEs will be implemented by Federal Ministry of Industry, Trade and Investment, with an estimated cost of N15 billion in a period of 0 – 3 months, according to NESP,
The project elements are:
- Collaborate with private sector MSME associations.
- Define the products, quantity required and the price for the identified products.
- Solicit interest from MSMEs to participate in procurement.
- Verify and screen the applications from bidding MSMEs.
- Provide registration support with CAC for unregistered MSMEs.
- Develop and sign contract with beneficiaries.
- Make payments based on agreements.
- Make arrangements for transparent purchase and distribution of procured items.
Details of SME Survival Fund established by Payroll support
Payroll support to designated sectors: The scheme is a conditional grant to support vulnerable SMEs in designated vulnerable sectors in meeting their payroll obligations and safeguard jobs from the shock of COVID-19. The scheme will seek to support 50,000 SMEs employing a minimum of 10 employees and a maximum of 50 employees each.
Designated vulnerable sectors include: hotels, creative industries, road transport, tourism, private educational institutions, etc.
Interest-free credit to artisans: In addition, a further scheme to support daily-paid and self-employed workers and artisans through the provision of interest-free credit to be disbursed through micro-finance and fin-tech credit providers.
Key elements
Identify beneficiary small businesses in designated sectors, viz: Hotels, Creative Industries, Road Transport, Tourism, Private Schools and Export-related businesses.
- Screen and verify applications using available company registration, tax registration.
- Identify, approve and disburse grants to beneficiaries through microfinance banks and financial technology credit providers.
- Identify eligible private transport companies and workers.
- Screen and verify applications of eligible Road Transport workers.
- Approve and disburse grants to beneficiaries.
Payroll support is to be implemented by Steering Committee on the MSME Survival Fund; Federal Ministry of Industry, Trade and Investment, Bank of Industry within a timeline of 0 – 3 months according to NESP. The cost of payroll support is at a total of N260 billion with the following break down;
- N50 billion [payroll support]
- N200 billion [loans to artisans]
- N10 billion [support to private transport companies and workers]
How Nigeria, a country with nothing more than sketchy data, and very poor record of policy implementation can pull this plan out remains to be seen.
Written by;
Ifunanya Ikueze