It has been gathered that four Federal Government-owned institutions will be used to fund the proposed National Credit Guarantee Company (NCGC).
The organisations are the Ministry of Finance Incorporated (MOFI), Bank of Industry (BOI), Nigeria Sovereign Investment Authority (NSIA) and Nigerian Consumer Credit Corporation(CREDICORP).
NCGC, which will be a joint venture by the four institutions, private sector players and multilateral institutions, is expected to commence operations in the second quarter of next year.
According to a document available to correspondents, NCGC will play the role of a guarantor of loans granted to borrowers, thereby reducing the risks of the lenders.
The document added that the goal of the government is to create a sustainable and effective credit guarantee entity that will support lending by sharing risks with financial institutions, thereby encouraging increased credit availability.
It (document) explained that by guaranteeing loans or loan portfolios, the NCGC will strengthen lender- confidence and facilitate wider lending practices.
The mandates of the four partner institutions include the provision of necessary financial resources and carrying out strategic oversight to ensure that NCGC fulfils its primary mission of reducing credit risks for lenders.
The NCGC will also participate in the risks undertaken by Participating Financial Institutions (PFIs) that extend credit to eligible beneficiaries.
In addition to offering direct guarantees, the NCGC will work with other credit guarantee schemes such as banks, insurance companies, and other relevant institutions. This collaborative approach is intended to enhance the overall quality and effectiveness of credit guarantees in the financial system.
Also, the company is expected to develop additional risk mitigation tools to support bank loans and similar financial instruments, providing lenders with greater assurance and flexibility.
The document stated that the NCGC will not engage in direct lending but will issue partial credit guarantees that will enable individuals and businesses to secure loans from their preferred financial institutions.
