Small and Medium Scale Enterprises

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CENTRAL BANK OF NIGERIA

SEMINAR ON
SMALL AND MEDIUM INDUSTRIES EQUITY INVESTMENTS
SCHEME (SMIEIS)

Publication of

CBN Training Centre, Lagos
NO. 4
 Central Bank of Nigeria (CBN)
Published 2003
All rights reserved. No part of this publication may be reproduced, transcribed, translated in any other language, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, magnetic, chemical, photocopying, recording, manual or otherwise, without the prior permission of the publisher.

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TABLE OF CONTENTS
Page
Preface

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Acknowledgement

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iii

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iv



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Survey of Small and Medium Scale Industries and Their
Potentials in Nigeria. By F.N., Udechukwu, AGM,
African Express Bank Plc





The Role of Central Bank of Nigeria in Enterprises Financing. By C.M. Anyawu, Deputy Director, Research Dept.,
Central Bank of Nigeria






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Problems and Prospects of Small and Medium-Scale Industries in Nigeria. By J.A. Olorunshola, Asst. Director/Vice Principal
(Academics), CBN\ Training Centre …



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Guidelines and Stakeholders Responsibilities in SMIEIS.
By Chief A.T. Salami, Deputy Director, Development Finance
Dept., CBN… …







45

Concepts of Equity Financing and its Implication for SMIEIS. By Rotimi Oyekanmi, MD/CEO, SME Managers Limited …

61

Critical Success Factors in the Implementation of SMIEIS.
By Dr. L. Osa-Afiena MD/CEO Bank of Industry …


81

Financing Small and Medium Enterprises Under SMIEIS: Operators’ Perspective. By B.O. Adelaja, Asst. General Manager,
Union Bank of Nig. Plc





95

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PREFACE
The production of goods and services in the most efficient manner has continued to be the only viable and reliable option for development, growth and survival of any economy.
The development of Small Scale Enterprises (SMEs) in Nigeria is therefore an essential element in the growth strategy. SMEs not only contribute significantly to improved living standards, they also bring substantial local capital formation and achieve high level of productivity. It was however, observed that the major gap in Nigeria’s industrial development process in the past years was of the dearth of long-term finance for Small Scale Industries (SMI). In other words, the significance of the Small and Medium Industry Equity Investment Scheme (SMIEIS) derives from the critical economic role of the real sector, the sector that engages in actual production (of which SMI sub-sector is a major component) in economic growth.

The concept of SMIEIS in Nigeria was the initiative of the Central Bank of Nigeria with the voluntary support and efforts of the Bankers’ Committee. The Scheme requires that all banks in Nigeria should set aside 10 percent of their profit before tax annually for equity investments in small and medium industries. This arrangement will eliminate the burden of interest and other charges associated with normal bank lending. The Scheme is therefore an innovative way of financing the real sector and it has a considerable developmental potential.

Consequently, the approval of the Bankers’ Committee on June 19, 2001 and subsequent launching of SMIEIS by the President of the Federal Republic of Nigeria, Chief Olusegun Obasanjo on August 21, 2001 gave impetus to the commencement of the Scheme in Nigeria.

It is against this backdrop that the seminar on SMIEIS was considered timely to enable staff acquire knowledge of the Scheme, articulate its roles in economic development and identify its sources of funding. Also, by describing the concept of SMIEIS from the point of view of the operators in our contemporary environment, we would be able to identify likely problems that may affect the success of the scheme and suggest solutions.

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I hope that this publication will create a general awareness and educate participants on...
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