Banks’ Investment in SMEs to Hit N90 Billion

• Banks’ Investment in SMEs to Hit N90 Billion

Mr. Godwin Emefiele, Governor of the Central Bank of Nigeria, has disclosed that banks’ contributions to the Small and Medium Enterprises Investment Scheme, AGSMEIS, and Agro-Business will hit N90 billion by December 2018.

Emefiele, who addressed the press at the end of the 10th annual Bankers Committee retreat, said national microfinance bank will be set up by the committee but in collaboration with NIPOST to offer low-interest credit to entrepreneurs across the nation.

“The AGSMIES fund by December this year will have N90 billion. That is part the funds that will go to support those that are going into farming or trading or those in music or fashion industry,” Emefiele said.

The governor said the recent shock to global economy has mandated the committee to tackle issues that impede exporters from accessing credit facility and enhance non-oil export.

He said: “This year, the theme of the retreat centered around export-led transformation of the Nigerian economy as an engine for sustainable, inclusive growth in Nigeria.

“For this year, we came and said, given the economic volatility and critical development in the Nigerian financial system, it is important that we renew our focus on non-oil exports that will help to catalise economic growth and also eliminate over dependence of our country on crude oil as a major source of earnings.

“We are saying there are challenges around, there are exogenous shocks happening in different parts of the world, which could ultimately constrain the capacity of the country to generate export revenues, particularly from crude oil and there is a need for us to think about how do we diversify our source of revenue earnings into non-oil export sector of the economy?

“We have decided to set up a committee headed by a bank chief executive officer. What that committee will do is to take a deep dive into some of the issues and challenges faced by exporters and then report back to our February 2019 meeting to raise some of the issues, and through that, the banks themselves will commit to ensuring that we deploy funds either on a commercial basis through banks or some of our intervention funds at the CBN to support this initiative.

“You will recall there was a time we contributed N500 billion to support export activities so as to boost export business and also help in generating export earnings into the country.

“We took a review and saw that that aspect has not really quite permeated the system and we wanted to hear from some of the export companies what their challenges were and that was the reason we set up the committee to look into these issues.

“But this time, we are determined that they will get the support they need and make it easy for them to get the credit but at the same time, put in place policies that will ring-fence the export earnings in a way that the funds come in and are used in a way that is beneficial to the economy.”

Explaining why it is necessary for the committee to set up a national microfinance in collaboration with NIPOST, the governor said: “The existing MfBs are doing their best but they are not lending at single digit interest rate.

“Some of them are even lending money on flat, where you borrow N50,000 from them for 90 days and they expect you to pay another N50,000 as interest in 90 days. That is outrageous and too exorbitant and we feel that if we have these funds available in the CBN, through our own National Microfinance, we can make access to funds easy, even if it is not single digit at 9.0 percent per annum, even if it is 15 percent, it is much lower than those borrowing money on what is called flat arrangement basis.”