On the 4th of August 2021, the Central Bank of Nigeria (the “CBN”) issued an exposure draft of the guidelines for the regulation and supervision of credit guarantee companies (“CGC”) in Nigeria (the “Draft Guidelines”).
The Draft Guidelines have been issued further to the CBN’s effort to improve access to lending for micro, small, and medium scale enterprises (“MSMEs”) and stipulate the minimum standards for the operations of CGCs that provide credit guarantee to participating financial institutions (“PFIs”) i.e., entities licensed to provide loans.
This is a new innovation by the CBN as CGCs were not previously required to be licensed by the CBN. As such, it would appear that existing companies that provide credit guarantees to PFIs would be required to comply with the provisions of the Draft Guidelines when it is finally issued by the CBN.
It is important to note that the minimum paid up capital requirement for CGs is N10,000,000,000.00(Ten Billion Naira). We have set out below other salient provisions of the Draft Guidelines: