Succour is on the way for operators in the Micro, Small and Medium Enterprises (MSMEs) segment as a Micro Finance Bank (MFB) that will specially cater for their funding needs and give loans at a single-digit will likely start operation by the end of 2022.
The MFB is at the instance of the Small Medium Enterprises Development Agency (SMEDAN) and it targets single-digit interest rates so as to be able to address the challenge of a special funding window for MSMEs in the country.
The 2013 Revised Regulatory and Supervisory Guidelines by the Central Bank of Nigeria (CBN) stipulates a N2 billion capital base for an MFB among other conditions to address challenges observed in the implementation of the Microfinance Policy of 2005 and emerging developments in the industry.
“The funds are ready and we have approached and met all the requirements of the CBN”, stated the new Director-General, of SMEDAN, Olawale Fasanya on Tuesday in Lagos.
“We own 40 per cent of the incoming MFB while the remaining 60 per cent is owned by other strategic investors including Association of Women Entrepreneurs, the National Association of Small Medium Enterprises (NASME) and two other investors”.
“I believe we will take off before the end of the year”, he said.
Nigeria has over 39 million MSMEs, providing over 60 million employment and contributing 49 per cent to the Gross Domestic Product(GDP) according to the last national survey of the SMEDAN/NBS.
The sector, however,, is encumbered with finance and other fundamental challenges like market, equipment, information, technical and entrepreneurial skills and workspace.
The Agency is present in all the 36 States of the Federation with Zonal Offices in different parts, but Fasanya said it will start with a branch of the MFB before expanding to other parts of the country.
” We will start with one branch and expand to other parts of the country. The kind of license that we seek from the CBN is the type that can make us have other branches”.
The bank is a child of necessity and Fasanya said the agency will get other interested parties so that it doesn’t interfere in the operations.
“We will be on the board but we will run it like a private sector organisation without government interference”.
SMEDAN’s presence on the board is to ensure that the SMEs that the bank is created for are the main beneficiaries.
“We want the SMEs to benefit because the interest rates of other MFBs are higher than commercial banks and this is what we are guarding against”.
SMEDAN is currently approaching many organisations including the Islamic Bank, Bank of Industry (BoI), and Development institutions to help with capital.
We don’t want the bank’s source of funds to come from where they charge interest so that the MFB can give out funds at a single-digit interest rate.
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