The Federal Government of Nigeria has put up a $193 million MSME support fund.
The FG announced this new development on Monday, September 21.
Precisely, the ₦75 billion payroll support will address “critically affected MSMEs and Startups.”
Also, the FG has opened a dedicated portal, through which eligible companies can register.
To be eligible, a company must have no fewer than three employees.
Besides, such companies must be registered with the Corporate Affairs Commission (CAC).
Nigeria economic sustainability plan
The COVID-19 pandemic has left a dent on the global economy.
Unfortunately, Nigeria isn’t spared as her economy was entirely shut for weeks.
In an attempt to stay afloat, the FG drafted an Economic Sustainability Plan (ESP).
The plan doubles as a guide on how to boost the Nigerian economy.
Some of these plans include saving startups and SMEs.
Also, the FG plans to create millions of tech-based jobs.
Surely, these categories of businesses are mostly those affected by the lockdown.
Before COVID-19, the rate of unemployment was on the high side.
Now, the situation is alarming.
Especially with several job losses over the previous months.
Recall that the United Nations (UN) projected over 13 million jobs at risk in 2020.
Similarly, a survey by the National Bureau of Statistics (NBS) echoed that claim.
According to the survey, 42% of 1,950 households reported job losses due to the pandemic.
Implementing the provision of the Financial Act
The sustainability plan includes activating the recently signed Finance Act for startups and MSMEs.
The Act is provided to reform the country’s tax law.
As such, the FG wants to adapt it to match the global standard.
More so, it will support MSMEs.
It will also boost investment in both “infrastructure and capital market.”
Also, in the future, the new Act will increase government revenue.
However, there is an exemption for SMEs turning below ₦25 million in annual revenue.
According to the provision, such organisations will not pay any form of income tax.
Additionally, the Act reduces the rate for medium businesses to about 20%.
Lastly, the Act will fully implement the new 7.5% VAT rate for commercial purposes.
Relief fund disbursement
The FG plans to sustain no fewer than 500,000 jobs across 50,000 MSMEs.
The plan will focus on those in critically affected sectors, including;
- Road transportation,
- Creative industries,
- Schools, e.t.c.
Initially, the FG will commit ₦50 billion payroll support for these businesses.
Also, it will commit a separate ₦10 billion for workers in the private transportation sector.
MSMEs funds disbursement
The FG has decided to set up a committee to ensure transparency during disbursement.
Federal Ministry of Industry, Trade, and Investment leads the committee.
It will be accompanied by the Bank of Industry (BOI).
Both committees will manage the entire process of disbursement.
FG projects the disbursement to last three months.
Registration for the Payroll Support Scheme has commenced.
— MSME Survival Fund (@SurvivalFund_ng) September 21, 2020
Registration is to be done via a dedicated website.
Thereafter, funds will be disbursed through microfinance banks.
Fintech credit providers will also play an active role in the disbursement of funds.
The year is already filled with unprecedented events.
But this initiative is quite relieving.
It also shows how actively the FG can respond to dire situations such as this.
We believe this is just a progressive effort towards achieving a prosperous nation.
What do you think about this initiative?
Kindly share your thought with us in the comments section below.
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