Finance Law :- CBN Modalities for the Implementation of the Creative Industry Financing Initiative(CIFI) in Nigeria
The Central Bank of Nigeria (CBN) in collaboration with the Banker’s Committee, as part of efforts to boost job creation in Nigeria, especially among the youth, introduced on the 31st of May 2019, the Creative Industry Financing Initiative (CIFI) with a view to improving access to long-term low-cost financing by entrepreneurs and investors in the Nigerian creative and Information Technology (IT) sub-sectors.
This article will be looking at the modalities of the CIFI and its prescribed transaction dynamics aimed at its smooth execution.
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What are the objectives of CIFI?
– To improve access to low-cost and sustainable financing by entrepreneurs and investors in the Nigerian creative and IT sub-sectors.
– To boost job creation, particularly among the youth.
– To harness the entrepreneurial potentials of youth within the Nigerian creative and IT sub-sectors for economic development.
– To complement other develop finance initiatives of the CBN to accelerate financial inclusion.
What are the activities covered under CIFI?
– Existing enterprises in the creative industry.
– Start-ups engaged in the creative industry.
– Students of higher institutions engaged in software development.
What are the focal sub-sectors covered by the CIFI?
– The Fashion designing industry
– The Information Technology (IT/Software Development) sub-sector
– The Movie industry (distribution & production)
– The Music industry ( production and distribution)
What are the provisions of the modalities on CIFI funding?
The CBN Modalities state that the CIFI shall be funded from the Agribusiness Small and Medium Enterprises Investment Scheme (AGSMEIS), an initiative of the Banker’s Committee, with a seed fund of 22 Billion Naira appropriated as follows :-
- The student software development loan – 1 Billion Naira
- Information Technology -5.5 Billion Naira
- Movie Production – 1.5 Billion
- Movie Production (Equipment Financing) – 1.5 Billion Naira
- Movie Distribution – 4 Billion Naira
- Music – 5.4 Billion Naira
- Fashion – 4 Billion Naira
What are the operational features of CIFI funding?
Software Development & Movies (Production/Distribution)
– Single Obligor Limit
Software Development – 3 Million Naira
Movie Production – 50 Million Naira
Movie Distribution – 500 Million Naira
– Interest Rate
Software Development – 9% Interest per annum
Movie Production – 9% Interest per annum
Movie Distribution – 9% Interest per annum
– Repayment Time Scheme
Software Development – Monthly
Movie Production – Quarterly
Movie Distribution – Monthly
-Equity Contribution
Software Development – 0%
Movie Production – 30%
Movie Distribution – 30%
– Moratorium
Software Development – 9 months from the date of loan disbursement
Movie Production – 24 months from the date of loan disbursement
Movie Distribution – 24 months from the date of loan disbursement
– Tenor
Software Development – 3 years
Movie Production – 10 years
Movie Distribution – 10 years
Fashion, IT & Music
– Interest Rate
Fashion – 9% per annum
Information Technology – 9% per annum
Music Production/Distribution – 9% per annum
– Tenor
Fashion – 10 years
Information Technology – 10 years
Music Production/Distribution – 10 years
– Monetization Target
Fashion – Equipment purchase & Rental/Service Fees
Information Technology – Equipment purchase & Rental/Service Fees
Music – Equipment purchase & Rental/Service Fees
– Moratorium
Fashion – 36 months from the date of disbursement
Information Technology – 36 months from the date of disbursement
Music Production/Distribution – 36 months from the date of disbursement
What are the eligibility requirements for loans under the CIFI framework?
You need to consult your lawyer on this.
What are the provisions of the modalities regarding Participating Financial Institutions (PFIs)?
All Deposit Money Banks (DMBs) shall be eligible to participate under the initiative.
What are the provisions of the modalities regarding monitoring and evaluation?
The modalities provide that there shall be regular joint monitoring and evaluation of financed projects by the CBN and respective PFIs. Reports on such projects are to be submitted regularly to the CBN .
What are the provisions of the CIFI modalities on infractions and penalties?
Infractions and penalties shall be as specified in the AGSMEIS Guidelines.
What are the provisions of the modalities on credit facility discontinuation?
The modalities provide that whenever a loan is repaid or the facility is otherwise discontinued, the PFI shall advise the CBN immediately, giving particulars of the credit facility. Any outstanding amount under the facility is to be refunded to the AGSMEIS Fund account within 7 days of credit facility discontinuation.