LAGOS STATE EMPLOYMENT TRUST FUND – REGULATION

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1.CATEGORIES OF APPLICANTS
Beneficiaries of the Trust Fund as created under Section 2 of the Law shall fall under the following portfolios:
a) Micro-Enterprise
b) Small and Medium Enterprises
c) Tech Startups and
d) Employability

2 Portfolio Allocation
The percentage of allocation of the Trust Fund to the portfolios listed under regulation 1(a-d) shall be as follows;

a) Micro-Enterprise 37%
b) Small and Medium Enterprises 38%
c) Tech Startups and 16%
d) Employability 3%
e) Market Stimulation 6%
TOTAL 100%

3. Loan Disbursement
The Fund shall disburse loan bi-annually.

4. Operational Expenses
The Fund shall expend on its operation not more than 10% of its capital in 2016 and shall progressively reduce this percentage subject to the annual approved budget for the Fund

5. Implementation
The Executive Secretary of the Fund pursuant to section 18(1)(3) of the Law shall be responsible for the implementation of this regulation subject to Board policy formulation by the per time Board.
PART 1

MICRO-ENTERPRISES (ME)
Definition
A Micro-Enterprise is a business with an annual turnover of less than N5,000,000.00(FIVE MILLION NAIRA) only with a minimum monthly turnover of N20,000.00 (TWENTY THOUSAN NAIRA) only and must have been in operation for a minimum of one (1) year or possesses a certification in trade and a reference from the certifying body.

6. Application
Applicant under this category shall fill out the prescribed form and shall submit same to the Executive Secretary of the Fund with the following documents:
(a) Evidence of Lagos Residency (Lagos Sate Resident Registration Authority(LASRRA) Card
(b) Valid bank verification number; and
(c) Tax card of the Directors or owner, whichever is applicable.

7. Loan Limit
The loan limit under this category is N500,000.00(FIVE HUNDRED THOUSAND NAIRA) only per person/household.

8. Conditions for Grant of Loan
(1) The following conditions shall apply to the loan granted under this category:
(a) Interest rate of 5% per annum;
(b) Repayment period of 12 (twelve) months;
(c) Personal life protection policy noting the Fund as first loss payee;
(d) Comprehensive insurance cover;
(e) Moratorium period of 3 months;
(f) 5% equity contribution by the beneficiary of the loan; and
(g) Evidence of clean credit record issued by the applicant’s bank.
(2) The Fund shall bear the cost of the life policy and insurance cover on behalf of the beneficiaries as contained under regulation 7(1)(c) and (d).

9. Security
(1) An applicant under this category shall fulfill the following conditions:
(a) Personal guarantee of the applicant to repay loan;
(b) one (1) guarantor; in the sum loaned plus interest( guarantor must be a permanent resident in Lagos State and must submit a copy of the Lagos State Residents Registration Authority (LASRRA) Card or Permanent Voters Card (PVC); and
(c) Valid bank verification number.

(2) The Fund shall have a right of set off on the applicant’s/ guarantor’s other accounts in any financial institution.

10. Eligibility
(1) Eligible beneficiaries under this category shall be businesses operating within the State and may be sourced from:
(a) micro- businesses in groups or clusters across the various Local Government/Local Council Development Areas;
(b) Trade associations and other related businesses;
(c) Registered cooperative groups or societies; and
(d) Referral from Local Government/Local Council Developmental Areas.
10(a-d) are to be authenticated by the Ministry of Wealth Creation and Employment.

10(2) Application to the Ministry for authentication under 10(1) (a-d) shall be responded to within 24hours and shall be presumed authenticated if after 48hours (working days) of submission to the Ministry by the applicant the Ministry fails to respond to the application.

PART 11

SMALL AND MEDIUM ENTERPRISES (SME)
Definition
A small and Medium Enterprises is a business with an annual turnover of between N5,000,000.00 (FIVE MILLION NAIRA) and N25,000,000.00 (TWENTY FIVE MILLION NAIRA) only; with a monthly turnover of N500,000.00 (FIVE HUNDRED THOUSAND NAIRA) only and-
(i) Has been in operation for a minimum of one (1) year;
(ii) Registered with Corporate Affairs Commission; and
(iii) Has an evidence of tax payment

11. Application
Applicant under this category shall fill out the prescribed form and shall submit same to the Executive Secretary of the Fund with the following documents:
(a) Promoter(s) Lagos State Residents Registration Authority (LASRRA) Card;
(b) Valid bank verification number;
(c) Tax card of the directors;
(d) Evidence of tax payment of the company;
(e) Evidence of registration with the Corporate Affairs Commission; and
(f) Business proposal that would show-
(i) Existence of a veritable and economically stable market for goods and services; and
(ii) A good understanding of the business.

12. Loan Limit
The loan limit under this category shall be a minimum of N500,000.00 (FIVE THOUSAND NAIRA) only and a maximum of N5,000,000.00 (FIVE MILLION NAIRA) only.

13. Conditions for Grant of Loan
(1) The following conditions shall apply to the loan granted under this category:
(a) interest rate of 5% per annum;
(b) repayment period of 36 (thirty six) months;
(c) personal life protection policy noting the Fund as first loss payee;
(d) comprehensive insurance cover;
(e) moratorium period of 6 months;
(f) 5% equity contribution by the the beneficiary of the loan; and
(g) evidence of clean credit record issued by the Fund’s bank

(2) The Fund shall bear the cost of the life policy and insurance cover on behalf of the beneficiaries as contained under regulation 12(1)(C) and (d).

14. Security for the Loan
An applicant under this category shall fulfil the following conditions:
(!) The following conditions shall apply to loan granted under this category
(a) Personal guarantee of the principal promoters;
(b) Two(2) guarantors( guarantor must be a permanent resident in Lagos State and must submit a copy of the Lagos State Residents Registration(LASRRA)
(c) All asset debenture (fixed and floating); and
(d) Guarantors must have valid bank verification number.
(2) The Fund shall have a right of set off on the applicant’s guarantor’s other accounts in any financial institution.

15 Eligibility
(1) Eligible beneficiaries under this category shall be businesses operating within the State and may be sourced from:
(a) Already identified businesses operating across different sectors authenticated by the Ministry;
(b) Corporate organizations targeting SMEs authenticated by the Ministry;
(c) Donor agencies such as USAID authenticated by the Ministry;
(d) Referrals from Local Government/Local Council Development Areas authenticated by the Ministry
(e) Registered cooperative groups or societies authenticated by the Ministry.

15 (2) Application to the Ministry for authentication under 15(1)(a-e) shall be responded to within 24hours and shall be presumed authenticated if after 48hours( working days)of submission to the Ministry by the applicant, the Ministry fails to respond to the application.

PART 111
TECH START-UPs
Definition
Tech Start-Up means a high growth, high potential business that is typically young and with a business model that relies heavily on software or other forms of technology for distribution of products/services or in its operations.
16. Target
The Fund shall target businesses within the following industries:
(a) Financial technology;
(b) Food and agri-business;
(c) Health-related start-up businesses;
(d) Environment and energy businesses;
(e) Women-led businesses in any of the above;
(f) Power;
(g) Transport;
(h) Education;
(i) E-commerce; and
(j) Creative industry.

17. Invention Life Cycle
The Fund will offer the following:
(a) Accelerated program for a period of 3 (three) months;
(b) Funding;
(c) Incubation services which include workspace, training and mentoring, infrastructure, market linkages and networking for a period of twelve (12) months.

PART 1V
EMPLOYABILITY
Definition
Training of applicant in skills that would improve chances of gainful employment.
18. Employability
The Fund shall collaborate with the Ministry to:
(a) Engage organisations to identify skill needs with corresponding vacancies or skill demand across various sectors;
(b) Keep an inventory of all agreements with the State to determine available opportunities;
(c) Leverage on existing database of skilled artisans and graduates as provide by the Ministry or in the absence of the database create a database of skilled artisans and graduates with specific certification; and
(d) Match identified candidates that fit job vacancy requirements.

19. Employment Training
1 The Fund shall:
(a) Train an applicant to bridge any specific skill gap or requirements;
(b) Place trained individuals on internship programmes for enhanced skill acquisition and gainful employment; and
(c) Execute agreement with organizations to retain individuals or alternatively the Fund may equip artisan with starter packs.
2 A person who is desirous of applying under this category shall possess a minimum of SSCE/NECO.
PART V
MARKET STIMULATION
Definition
These are activities that assist businesses in overcoming challenges faced on a regular basis in order to improve economic growth.
20. Intervention
The Fund shall stimulate an enabling environment by adopting an intervention, support and promotion framework in the following areas:
(a) Improve market conditions: The Fund shall help businesses with the following;
(i) Access to off takers (investors)
(ii) Linkages with Government spending sectors
(iii) Improve product quality for export market
(b) Improve access to production inputs/raw materials;
(c) Improve standards and production quality;
(d) Improve access to land titles;
(e) Encourage predictable and transparent taxes/levies;
(f) Enhance the process of obtaining permits/licenses/approvals;
(g) Human capacity development;
(h) Infrastructural support e, g. road, power, internet; and
(i) Job and career fairs.

PART VI
PARTNERS
21. Partners under the Micro-Enterprises
(1) The Fund shall partner with Microfinance Banks and Microfinance Institutions with State or National Licenses based on their evaluation on the following criteria:
(a) branch network(minimum of five(5) branches in Lagos State;
(b) quality of board;
(c) capital adequacy and assets;
(d) management;
(e) liquidity; and
(f) earnings.

(2) The Fund shall ensure that the partners selected under sub-regulation (1) has branches across Lagos State.
(3) The Fund shall carry out periodic performance reviews and reallocate capital among partners based on their performance.
(4) The maximum loan amount per cycle of Microfinance Bank lending shall be 50% of shareholder’s fund unimpaired by losses or if higher, as indicated below:
(a) State Microfinance Bank: N50,000,000.00(FIFTY MILLION NAIRA) only limit; and
(b) National Microfinance Bank N250,000,000.00(TWO HUNDRED AND FIFTY MILLION NAIRA) only limit
(c) Lagos State Microfinance Institute (LASMI) and ibile Microfinance Bank to have a maximum loan limit of N100,000,000.00(ONE HUNDRED MILLION NAIRA)

21. Partners under SME
(1) The Fund shall collaborate with selected commercial banks to reach target beneficiaries.
(2) The selected banks shall be ranked using the following criteria:
(a) SME focus;
(b) track record in SME lending;
(c) capital adequacy and assets;
(d) earning quality;
(e) liquidity ratio; and
(f) strong risk management portfolio;

(3) Partners would be aligned based on their capacity and preferred areas of SME coverage.
(4) The Fund shall execute a Memorandum of Understanding with the selected partners detailing operating conditions.

PART VII
TRAINING
22. Micro-Enterprise Training and Support
The Fund shall give beneficiaries under this category pre-disbursement training in order to equip beneficiaries with business management tools.
23. SME Training, Business Development Monitoring
The Fund shall:
(a) Give pre-disbursement training to equip beneficiaries with business management tools;
(b) Collaborate with partner banks to conduct periodic post-finance service such as mentorship hand-handling and encourage SMEs to inculcate best practices;
(c) Support SMEs to develop synergy and linkage with large enterprises, industrial buyers and suppliers along the value chain;
(d) Provide financial management services to businesses evidenced by monthly report submission;
(e) Provide Human Resource (HR) services to ensure compliance with tax and pension requirements.

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