Nigeria: MFBs and The Challenge of Accessing Funds

Nov 2012
Nigeria, November, 26 2012 - It is easier to announce the launch of development or intervention funds for any financial institution but accessing such funds is usually difficult.

This is the challenge faced by microfinance banks as they find it difficult to access the Central Bank of Nigeria (CBN)’s pronounced funds for Micro, Small, and Medium Enterprise (MSME) funds.

There was the N54 billion Small and Medium Industries Equity Investment Scheme (SMEIS), a voluntary initiative of the Bankers Committee whose membership includes all managing directors and chief executive officers of banks in Nigeria that requires all licensed banks in the country to set aside 10 percent of their profit before tax (PBT) for equity investment in and promotion of small and medium enterprises (SME’s). However, this fund could not be accessed by microfinance banks till date.

Now, the CBN has launched the N220 billion MSMED fund which seeks to provide wholesale funding requirements of microfinance banks and microfinance institutions for on-lending to micro and medium enterprises.

Operators of microfinance banks have expressed concern over the possibility of accessing the fund. Sunny Akhamiokhor, managing director of Support Microfinance Bank Limited, Lagos, said he hoped MSMED fund was not going to be a theory. He urged the CBN to ensure the fund is properly disbursed and used for the purpose it is being set aside for.

Some of the operators who were present at the Sterling Bank told the managing director to assist them in making sure that the fund is accessed by microfinance banks.

Deposit Money Banks and microfinance banks are partnering to take advantage of the CBN’s N220 billion, Micro, Small and Meduim Enterprise Development Fund (MSMEDF) that will be launched very soon.

Yemi Adeola, managing director, Sterling Bank plc, in Lagos, shared with operators of microfinance banks on the available intervention funds from the CBN they can benefit from.

Such intervention funds include the N600 billion for MFBs to access for onward lending to agricultural sector, N220 billion MSMEDF, and N400 million renewable energy among others.

Speaking with journalists shortly after the MFBs customer forum organised by the bank, Adeola said: “We realise that government is coming up with intervention fund and they are asking microfinance banks to access this fund through commercial banks. We knew that a good number of them might not know how to go about it. So it will be nice to bring everybody together, share with them of all available intervention funds that they can benefit from and offer to them our willingness to help them access the fund.

“We are here to discuss these opportunities and to show you what else we can do for you and I hope this partnership will be mutually rewarding.”

However, operators of microfinance banks urged Sterling Bank to focus on reducing cost of operation, ensure value relationship and assist them in accessing the funds.

Making a presentation at the forum, Abubarka Suleiman, chief operating officer, Sterling Bank said the bank believes strongly in strategic partnerships and is already in partnership with some microfinance institutions in relation to electronic business and agricultural finance.

According to him, the bank identifies with the brand promise of microfinance banks and believes there is need to leverage on technology to increase their retail penetration and enable their customers enjoy electronic banking facilities.

Source : Business Day

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