NIGERIAN EXPORT-IMPORT BANK (NEXIM) GUIDELINES FOR OPERATING THE NIGERIAN CREATIVE AND ENTERTAINMENT INDUSTRY STIMULATION LOAN SCHEME (NCEILS)

NIGERIAN EXPORT-IMPORT BANK (NEXIM) GUIDELINES FOR OPERATING THE NIGERIAN CREATIVE AND ENTERTAINMENT INDUSTRY  STIMULATION LOAN SCHEME (NCEILS)
by

NEXIM

1. Introduction

In the brief time that this administration has been in government in Nigeria, its key
economic priorities in refocusing the Nigerian economy have been (i) policies and
measures aimed at stimulating and delivering Enhanced Economic Growth – primarily
aimed at encouraging the flow of capital towards the real and productive sectors of the
economy; (ii) inclusive growth and job creation; (iii) Fiscal and Budget reforms including
the establishment of a Sovereign Wealth Fund for more effective management of the
nation’s resources; and (iv) Institutional reforms such as the strengthening of the
National Economic Management Team for improved co-ordination of economic policies
across the board.

Underlying these policies and interventions is the strong recognition of the need to
generate inclusive growth that significantly reduces the uncomfortably high levels of
unemployment most particularly amongst urban youths.

SMEs/SGBs as Primary Inclusive Growth and Employment Generators

At the heart of this government’s focus is ensuring inclusive growth and employment in
the economy. It is the acknowledged understanding the importance of Small and
Medium Enterprises (SMEs) and/or Small and Growing Businesses (SGBs) as the most
likely generator of jobs as well as the primary engine of economic growth in economies
around the world including Nigeria. Research conducted shows the following as the
major help needed by Nigerian SMEs/SGBs to deal with their major problems:

.
reducing their cost of doing business (including vastly simplifying their taxes);
.
training and capacity building;
.
improving their access to finance; and
.
finding solutions to market policy failures

The FGN sees itself as a catalyst in starting off a number of SME/SGB support
initiatives and programs and in establishing an initial set up or catalyzing fund. The
FGN’s funding commitment of US$500 million represents a significant commitment by
FGN to this critical segment of the economy.

However, this is partly to address the historical reluctance of Nigerian banks to engage
the segment by showing that FGN credits, properly channeled to the segment, can be
serviced and repaid thus hopefully setting a precedent that banks will directly adopt as
their liquidity positions improve.

FGN also hopes that in the near future the wide stakeholder involvement that it will
deliberately build into a governing body structure – with DFIs, financial community and
SME/SGB representatives, and the proposed transparent governance arrangements
and auditing and reporting requirements will encourage active wide stakeholders

participation and hopefully the enlargement of the program as more DFIs and private
financiers come on board with people and funds.

The Creative and Entertainment Industry:

In order to ensure the fundamental growth of the entertainment sector, generate
employment and add significant value to the Nigerian Economy by fostering sustainable
social and economic development, the Government has taken a laudable initiative by
making available a US$200 million Stimulation loan facility which is being provided for
intervention in the entertainment industry under the Nigerian Creative and Entertainment
Industry Stimulation Loan Scheme (NCEILS).

The Nigerian Creative and Entertainment Industry Stimulation Loan Scheme is intended
to address issues regarding the institution of credible structures, attract investment in
the development of content and infrastructure in the media and entertainment sector as
well as improvement in production standards, distribution, marketing and exhibition
standards.

The Guidelines below apply to application for viable and bankable investment in the
entertainment industry and are subject to regular review.

2. Objectives

The Nigerian Creative and Entertainment Industry Stimulation Loan Scheme (NCEILS)
is designed to achieve the following strategic objectives:

a. Harnessing Nigerian cultural diversity and talents in a structured manner to
ensure the orderly growth and development and the conservation of the
nation’s cultural heritage,

b. Enhancing the abilities of players in the entertainment sector to collectively
benefit from Government support programme for the industry

c. Improving quality at all stages of the value chain from production to post-
production and retail distribution, thereby deepening creative entertainment
value chain and diversifying revenue streams in the industry.

d. Promoting the creation of a viable and sustainable industry, thereby
enhancing employment generation and wealth creation potentials of the
sector and performance of small and growing businesses in the country;

e. Broadening Nigerian export basket through formal and non traditional
exports of Intellectual Property products and services;

f. Attracting investment capital to the industry towards the development of
modern studios and/or broadcast/media facilities;

3. Eligibility

a) Company

Any Company in Nigeria can benefit from the facility provided that it is legally registered
/ incorporated in Nigeria,

i. It operates in the entertainment and creative industry,

ii. It is not owned by government (federal, State or local),

iii. It is not an oligarch business interest that may interfere with content
policy for its own interests

b) Industry Value Chains / Service Areas

Funding under this facility covers all segments of the entertainment industry and across
any stage of a production process. The following categories are therefore eligible for
funding support;

i. Music (Production & Distribution)
ii. Film (Production, Distribution, Exhibition)
iii. Television (Production, Distribution, Exhibition)
iv. Radio (Production & Distribution)
v. Fashion (Production, Distribution, Exhibition)
vi. Distribution Infrastructure / Platforms

c) Activities eligible for finance

a) Film production
b) Music and Film export market development and proper distribution
network / system
c) Development of distribution infrastructure / platforms
d) Development of production platforms and facilities
e) Acquisition of hi-tech production equipment and ancillary facilities
f) Existing project refinancing (where it is demonstrable that jobs will be
saved / additional jobs will be created)
g) Others (As may be specified from time to time)

4. Features

The Nigerian Creative and Entertainment Industry Stimulation Loan Scheme (NCEILS)
shall have the following key features.

a) The facility is for the funding of capital and intangible assets,
b) The facility is for a tenor of up to 10 years tenor.
c) The facility is made available in both Naira and foreign currency and
repayable in the currency of disbursement.
d) The facility can be used to refinance existing debt of operators in the creative
/ entertainment industry that are adjudged uncompetitive and detrimental to
the sustainable growth of the sector.
e) The facility shall be disbursed directly through NEXIM. However, where it is
deemed necessary and expedient, the principal bank may enter into
collaborative funding arrangement(s) with other Bank(s) on best commercial
practices basis.

5. Processing of Application Forms

All prospective applicant shall collect and complete the NCEILS Application Form
(Annex I) obtained directly from the NEXIM.

The applicant shall forward the completed application form, supported with a copy of the
project’s brief/feasibility study and certified true copies of the following documents:

1) Company’s Incorporation Documents – (Certificate, Memorandum and
Article of Association, Forms CAC2 and CAC7)
2) Audited Statement(s) of Account / Statement of Affairs /Cash flows
3) Budget(s), Bills of Quantity, Pro-forma Invoice(s), etc, where applicable
4) Completion Bond, where applicable
5) Proprietary Rights / Syndicated Rights, where applicable
6) Collateral security / Intellectual Property Assets that are properly patented,
trademarked, copyrighted, etc to be pledged/assigned
7) Executed Contracts / Agreements (rental / lease, Retail / Sales Agency, Cast
/Crew, etc
8) Any other document that may be required by NEXIM

6. Processing and Approval of Application

. The applicants shall submit their applications and supporting documents to
the bank.
. The bank shall appraise the applications and assess inherent risks that meet
eligibility and viability criteria
. The bank shall in the process of its technical assessment of all applications
forward briefs on the proposed projects to the Nigerian Creative and
Entertainment Strategic Advisory Board for technical input and advice,
where deemed necessary.
. Where an application is approved, the bank shall inform the applicant in
writing stating the terms and conditions of the facility
. Where an application is not successful, the applicant shall be notified
accordingly.

7. The Nigerian Creative and Entertainment Strategic Advisory Board

The Nigerian Creative and Entertainment Strategic Advisory Board shall have the
following terms of reference;

i. Develop strategic framework / road map for the orderly and sustainable
development of the entertainment industry as well as identify from time to time
value chain(s) in the industry that requires intervention / protection

ii. Play advocacy role to support the entertainment industry with regards to;
. Highlighting problems and challenges of the industry, e.g. Piracy Issue
. Government Policy support to the industry
. Capacity building / Development Partnership arrangements
. Attracting investment capital to the industry
. Protection of Intellectual Properties

8. Disbursement

Approved loan shall be disbursed in line with disbursement modalities structured during
appraisal process and shall include but not limited to the following modes;

. Disbursement of loan proceeds to designated collection accounts opened by
applicant with any bank(s) acceptable to the issuing bank
. Loan proceeds disbursement through the establishment of relevant letter(s)
of credit (L/C) on behalf of applicant
. Disbursement of loan proceeds to applicant’s service providers / contractors
against job completion certification.
. Disbursement by way of direct remittance to suppliers / patent owner, etc

9. Interest Rates / Fees

a) The total interest to be charged on any loan facility under the scheme must be in
single digit.

b) The bank shall charge interest on the facility at the following rates on the basis
of tenor and assessed risks;

Under 2 years – 7.0% – 7.5%

Between 2 years and 5years – 7.5% – 8.5%

Between 5 years and 10 years – 8.5% – 9.0%

The following upfront fees are chargeable under the facility by the bank

i) Processing / Facility Fee – Up to a maximum of 1% flat on approved loan
amount. This fee shall cover estimated expenditure on due diligence,
appraisal / pre-disbursement visits, credit enquiries, and Management
Consultancy Services, where and when required.

ii) Annual Management Fee – 0.75% of outstanding loan amount payable at
anniversary date of facility drawdown on outstanding loan amount from time
to time primarily to cover project management and monitoring fees

iii) Legal Fees – As may be advised but to the account of applicant. This fee
include payment to Solicitors for services/opinions, statutory fees / duties on
legal documentation and registration, etc.

10. Security

The facility granted shall be secured by a charge / security interest over all of applicant’s
assets, copyrights, rights, etc and on the equipment / assets financed and/or the under-
listed securities acceptable to the bank, among others:

a. Registered Intellectual Property / Proprietary Assets
b. Joint and Several Guarantees of the Directors of applicant company with
Notarized Statement of Net worth
c. Provision of Guarantee cover issued by any financial institution acceptable to
the bank
d. Insurance cover from any acceptable/reputable insurance company;
e. Marketable financial instruments

f. Assignment of receivables/lien on proceeds/deposits and the right of set-off
g. Any other security that may be acceptable to the bank.

11. Repayment of Loan

Repayment shall be in the currency of disbursement and in accordance with agreed
Repayment Schedule and the terms and conditions of the executed Facility Agreement
between Beneficiary Applicant and the bank.

12. Penalty

a) A penal rate of at least an additional one (1) percent interest shall be
charged on all overdue obligations with effect from the due date after grace
period, where such has been agreed upon.

13. Other Conditions of the Loan

a) The proceeds of the loan shall be used for eligible transaction and in
conformity with the terms of payment for commercial contract entered with
suppliers, contractors, service providers, patent royalty payment, etc.

b) The funds so disbursed shall not be used for purposes other than those for
which they are approved.

c) The bank reserves the right to cancel the facility where the terms and
conditions are not fully complied with.

NIGERIAN EXPORT – IMPORT BANK

NEXIM

March, 2011

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Afolabi and Adedeji Adesanya, the Adesanya Brothers (aka A-Brothers), are back again! From the stable of A-Productions, they gave us such classics as Vigilante (1988) and the capital market financed Ose Sango – Sango’s Wand (1991). They are teaming up, though not for a production but for training and capacity building in the creative arts on the platform of Sagamu Business and Arts Institute (SBAI).

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