The film and video industry is one of the few areas of the global economy that advances with the pace of technology. Keeping stride with advances in technology is at the heart of the strategies used by film industry businesses to create the most desired user experience. Global internet video revenues are projected to grow at a compound annual growth rate (CAGR) of 11.6% to reach US$36.7 billion in 2021, while terminally declining markets for DVDs and Blu rays will have fallen to US$13.9 billion1. Demand has shifted towards the more immediate and convenient Video-On-Demand (VOD) market, with contents accessible via a wide range of connected devices allowing consumers to view when and where they desire. While there remains a strong market for ownership of content through transactional VOD (TVOD) services , growth will be mainly focused on subscription VOD (SVOD) platforms, with subscribers attracted to full seasons of original content and back-catalogues they can binge view2. According to PWC’s Global entertainment and media outlook 2017-2021, Nigeria with a 12.1% CAGR (albeit strongly influenced by surging spending on mobile internet access), will be the world’s fastest- growing E & M market over the coming five years3. Read more...
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CBN PROHIBITS TRADING, LOAN REFINANCING IN NEW CREDIT SCHEME
The Central Bank of Nigeria (CBN) has prohibited operators involved in trading activities from accessing its real sector support facility and warned banks that attempt to “falsify through presentation of projects that do not meet the eligibility criteria/specified terms and conditions shall attract severe penalties”.
Also, refinancing of existing loans is prohibited for funding under the programme, saying that any attempt to falsify information would also attract severe sanctions.
These formed part of the released guidelines for accessing the Real Sector Support Facility (RSSF) through Cash Reserve Requirements (CRR) and Corporate Bonds (CBs). The activities to be covered under the programme would be Greenfield (new) and expansion (Brownfield) projects in manufacturing, agriculture and other related sectors approved by the CBN. Though, emphasis would be placed on Greenfield projects.
The facility shall have minimum tenor of seven years and a two-year moratorium; and, the participating financial institution (PFI) shall bear the credit risk. Also, it had stated that Corporates/Triple A-rated companies would be encouraged to issue long-term corporate bonds (CBs). However, under the new guidelines, banks interested in providing credit financing to Greenfield and Brownfield projects in the real sector (agriculture and manufacturing) may request the release of funds from their CRR to finance the projects, subject to the bank providing verifiable evidence that the funds shall be directed at the projects approved by the CBN.
“Such requirements would include publishing through printing of an Information Memorandum spelling out the details of the projects for which the funds are required together with terms and conditions showing that these are long term projects that are employment and growth stimulating.”
The new guidelines stressed that priority would be accorded projects with high local content, import substitution, foreign exchange earnings and potential for job creation. The objectives of the facility include to improve access to affordable finance to the manufacturing, agricultural, and other related sectors that are employment and growth stimulating to the economy. It is also aimed at stimulating growth in employment-elastic sectors.
In terms of CBs, which are financing instruments issued by corporates that meet eligibility criteria as specified by the CBN, the tenor shall be as specified in the prospectus by the issuing corporate but not below seven years. Also, the moratorium for such CBs shall be as specified in the prospectus by the issuing corporate.
The maximum facility shall be N10 billion per project. Facilities are to be administered at an all-in interest rate/charge of 9 per cent per annum. Bank customers are encouraged to report any bank to the CBN’s Director of Banking Supervision, where such DMB may have charged interest rates above the prescribed maximum of nine percent per annum. “Repayments shall be amortised and remitted on quarterly basis to the CBN. “Only CRR contributing DMBs shall be eligible to participate under the DCRR. For CBs, all financial institutions and public are eligible to participate in investing in CBs…. A borrower shall be an entity incorporated in Nigeria under the Companies and Allied Matters Act of 1990. Such borrower must not have a non-performing facility with any financial institution.”
Under the programme, the PFIs are expected to undertake due diligence based on normal business consideration; forward an initial credit request on the proposed project to the CBN for pre-funding assessment/ approval-in- principle to proceed; forward final approved requests to CBN for funding after meeting all conditions precedent to disbursement of the facility; and disburse funds to obligors through their banks in agreed tranches, based on disbursement schedules submitted by the banks to the CBN within 5 working days of release from the CBN. The PFIs are also expected to render periodic returns as specified by the CBN from time to time, monitor the projects and comply with the guidelines of the facility, among others.
