- CBN: Finance Houses Can Access N220b MSME Cash
The Central Bank of Nigeria (CBN) said Finance Houses can now access N220 billion Micro Small and Medium Enterprises Development Fund (MSMEDF).
But accessing the fund comes with a caveat: The operators are to provide regulatory examination report from the CBN or Nigeria Deposit Insurance Corporation (NDIC) as well as audited accounts.
Speaking at the Finance Houses 2018 biennial finance and investment conference held in Lagos, CBN Director, Development Finance Department, Mudashiru Olaitan said that finance houses are eligible to access the wholesale segment of the fund provided they meet the stipulated conditions. He however, said operators are yet to apply for the facility.
Olaitan, who spoke on the theme: ‘Operationalising the MSME Development Fund: Framework, Constraints, Possibilities’ said the MSMEDF was designed to channel affordable credit to the MSME sub-sector, especially women entrepreneurs so as to create jobs and enhance productivity.
The scheme prescribes 50:50 on-lending to micro-enterprises and Small and Medium Enterprises (SMEs) and comes as Wholesale component (90 per cent) and Development component (10 per cent).
He explained that the 60 per cent of wholesale component is for women entrepreneurs while the remaining 40 per cent go to other entrepreneurs.
According to Olaitan, the fund enhances financial access by MSMEs and increases productivity and output of micro-enterprises. It is also expected to increase employment, create wealth and engender inclusive growth.
According to him, the objectives of Wholesale component of the MSMEDF is to provide credit to qualified and eligible Private Finance Initiatives (PFIs) for on-lending to MSMEs, improve the capacity of PFIs to meet credit needs of MSMEs and reduce the cost of funds to PFIs and ensure that this translates into reduced borrowing costs for the borrowers.
He explained that interest rate is pegged at maximum of nine per cent per annum and maximum tenor of one year for micro-enterprises and up to five years for SMEs while refinancing of existing facilities under MSMEDF not allowed.
“The MSMEDF has so far promoted the Anchor Borrowers Programme under which 200,133 other MSME projects were financed across the country from 2014 to date. The scheme currently supports the Shared Agent Network Expansion Facility aimed at enhancing the capacity of CBN-licensed agents to roll out 500,00 agent networks across the country,” the CBN director said.
In her welcome address, President, Finance Houses Association of Nigeria (FHAN), Mrs. Bola Agunbiade, said the finance houses operate in the MSMEs sector, adding that there was need to resolve funding gaps in the sub-sector.
She said that lack of access to cheap funds limits the operations of finance houses and that has to be corrected.
“The conference is all stakeholders’ forum meant to discuss challenges in our operating environment especially as it has to do with paucity of funding in the subsection,” Agunbiade said.