The Central Bank of Nigeria (CBN) is planning to review the guidelines for accessing its N220 billion Micro, Small and Medium Enterprises (MSMEs) Development Fund to ensure easy access by next year.
Acting Director, Development Finance Department of CBN, Mudashir Olaitan, who spoke at a recent workshop on “Framework for N220 billion MSMEs Development Fund,” said five commercial banks had already signed a Memorandum of Understanding (MoU) with CBN on the way forward.
He listed the institutions involved to include United Bank for Africa (UBA), Skye Bank, Guaranty Trust Bank, Zenith Bank and Fidelity Bank.
Olaitan said the commercial banks were, however, “foot-dragging” because of the small volume of the lending under the fund and the little profit margin from their intermediation role.
According to CBN, the loan would be given out at 3 per cent interest rate but commercial, microfinance and development banks want nine per cent.
He added that the CBN launched the fund to close the financing gap of the sub-sector estimated at N9.6 trillion as of 2010.
Olaitan said the bank recognised that access to finance remained the most critical challenge to MSMEs’ development making them unable to play their roles effectively.
He said MSMEs globally serve as engine of economic growth, vehicle for job creation, drivers of production and income generation as well as tools for poverty reduction and wealth creation, among others.
In Nigeria, 60 per cent of the fund had been earmarked to provide financial services to women for their peculiar financial exclusion circumstances although the apex institution wanted a ratio of 50:50 for on-lending to micro-enterprises and Small and Medium Enterprises (SMEs).
Olaitan explained that 20 per cent of the wholesale component of the fund was meant for economically active persons with disabilities, adding that eligible enterprises in agricultural value chain activities, services, artisans, cottage industries, trade and general commerce and any other income generating projects could benefit.