Central Bank of Seychelles |19 June 2020

Mr Edmond (Photo: Thomas Meriton)

Private sector relief scheme extended to large businesses

• 130 MSMEs lodge applications

A total of 130 applications for the credit facility, under the Private Sector relief scheme, aimed at micro, small and medium enterprises (MSMEs), have been lodged, according to latest figures released by the Central Bank of Seychelles (CBS).

First deputy Governor Christophe Edmond on Wednesday provided an update on the scheme aimed at MSMEs with an annual turnover not exceeding R25 million, and additional information about the newly established scheme, aimed at large businesses impacted by the COVID-19 pandemic, approved by the board on June 15 following consultations with the private sector and the Seychelles Chamber of Commerce and Industry (SCCI).

Mr Edmond noted that commercial banks and the Development Bank of Seychelles (DBS) had by June 12 received 130 applications for the existing scheme for MSMEs, 22 of which have been approved and 91 which are still processing. The total value of approved requests stands at R7,235,762.

Seventeen requests have been rejected either due to failure to meet the conditions or that the business is not eligible to benefit from the scheme, Mr Edmond stated.

As the scheme is financed by CBS, with commercial banks and DBS as facilitators, commercial banks forward the requests seeking funding from CBS, to then disburse to the clients. As at June 16, CBS received 4 requests from commercial banks, all of which were approved, to a sum of R4,743,452.

With regard to the numerous proposals and recommendations of the private sector during consultations, Mr Edmond noted that the board approved the extension in scope of coverage of the scheme to include redundancy costs and expenses related to the implementation of the sectoral guidelines for workplaces issued by the department of health, subject to relevant business viability assessments conducted by participating institutions.

“We are including these two components in the list of expenditure that businesses must address during this COVID-19 pandemic. But with regard to redundancy costs, to be assisted under the scheme, the applicant must ensure that the business is to remain operational, and not redundancy to close down the business and pay the workers. It is purely for if a business owner is making redundant some of their employees but the business remains in operation and they expect to be in business for the long-term,” Mr Edmond explained.

Furthermore, the board approved the proposal to extend the moratorium from 6 months to 12 months and the extension of maturity date from 3 years to 5 years, although this decision is subject to cabinet and National Assembly approval. Although it was proposed that government provide 100 percent guarantee, government guarantee is 70 percent.

As for the scheme for large enterprises, also proposed by the private sector and which was established this week following consultation with government and other stakeholders, Mr Edmond noted a R750 million credit line facility, established and financed by CBS to provide financing to large enterprises with annual turnover above R25 million.

Similarly to the scheme applicable to MSMEs, the core objective of the credit line facility is to assist businesses in meeting rent payments, utilities, salaries, taxes, goods and services contracts, redundancy costs as well as expended related to the implementation of guidelines issued by the department of health, the latter two subject to business viability assessments.

Eligible businesses must be engaged in economic sectors impacted by COVID-19 and the applicants’ existing loan facilities must be in good order at the end of February 2020. All applications are subject to credit assessments. Mr Edmond, noted a centralised system, the Credit Information System (CIS), in place since 2012, on which information about individual clients’ creditworthiness can be accessed by all commercial banks.

Unlike the scheme for MSMEs in which the lending rate is at 1.5 percent per annum, the lending rate for large enterprises is at 4.5 percent per annum on account that they generate more revenue, with the maximum tenor of 3 years inclusive of 12 months moratorium.

Furthermore, applicants must satisfy the condition that the financing sought must be of sufficient amount to cover the critical expenditure of the borrower for a period of 6 months. The government guarantee for the scheme is 50 percent.

Large enterprises who are eligible can apply through their respective commercial banks or DBS, to be informed on the required documents, among which will include a written application with supporting reasons, forecast cash flow statement for at least six months, and management or audited accounts for 2018/2019.

The processing period is expected to be 15 days for large enterprises and 5 to 10 days for MSMEs.

The private sector relief scheme is a credit facility established by CBS in anticipation of revenue constraints that businesses are and will face as a result of the COVID-19 pandemic.

Laura Pillay