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Banks, microfinance institutions, PFIs warming up to access N220bn MSMEDF

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Finally, the N220 billion Micro Small and Medium Enterprise (MSME) Development Fund launched last year by the Central Bank of Nigeria (CBN) is almost ready for disbursement to the sub-sector through eligible financial institutions.

The eligible financial institutions are deposit money banks that are responsible for SME loans, private- or state-owned microfinance institutions that access and disburse micro loans, finance houses and cooperative finance agencies; and 60 percent of the fund is for women.

The CBN, states and microfinance banks have signed a memorandum of understanding (MoU) to this effect. At the signing ceremony in Abuja, recently, Godwin Emefiele, CBN governor, said: “This fund is directly in conformity with my resolve to create a professional and people-centred Central Bank that will act as a financial catalyst for job creation and inclusive economic growth.

“While these are our ultimate goals, our main intermediate objective is to ensure that these funds get to people at the very bottom of our social pyramid at single-digit interest rates. Without achieving this intermediate objective, I have no doubt that it would be impossible to achieve the ultimate goal of job creation and poverty reduction.”

Meanwhile, microfinance banks as well as deposit money banks are already warming up to access this fund for on-lending to their clients.

Godwin Ehigiamusoe, managing director/CEO, LAPO Microfinance Bank, is indeed optimistic that Emefiele will tackle the challenge of lack of refinancing facility in the sub-sector by fast-tracking the process of getting the MSME Development Fund into operation.

In order to ensure the attainment of its goals, the CBN said it would be committing considerable human, material, and financial resources to monitoring both the disbursement and utilisation of these funds in a robust and verifiable manner.

Participating financial institutions (PFIs) will be required to submit periodic returns on disbursements as well as an analysis of the social impacts of the Fund. The CBN will also undertake regular on and off site checks to ascertain veracity of the reports received.

“I enjoin all of you, your Excellencies, to help us in achieving these goals by ensuring that these funds are deployed in an effective and efficient manner,” Emefiele said.

According to him, MSMEs are globally recognised as the critical engines of economic growth due to their potential to create jobs, boost production, generate income, and reduce poverty. Despite this recognition, MSMEs in Nigeria do not have the adequate financing needed to play this pivotal role in the nation’s development trajectory, he said.

According to a joint report by the International Finance Corporation and McKinsey, the financing gap of this critical sub-sector of the country is about N9.6 trillion as of 2010.

In order to address this gap and unlock the potential of Nigerian MSMEs, the CBN has initiated the N220 billion fund as an innovative way of improving their access to finance, shoring up their potentials for job creation, and enabling them reduce poverty within the country.

The effort, he said, is in furtherance of the bank’s earlier endeavour at establishing six Entrepreneurship Development Centres (EDCs) in each geopolitical zone to support the mandate of the 23 Industrial Development Centres (IDCs) under the purview of the Small and Medium Enterprises Development Agency (SMEDAN).

Article Credit: Businessdayonline

Updated 4 Years ago

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Tags:     MSME     CBN     Godwin Emefiele     LAPO Microfinance Bank     Godwin Ehigiamusoe