by Ranti Joseph
The Federal Government has reduced the collateral requirement for the N220billion Micro Small and Medium Enterprises (MSMEs) fund from 75% to 50% and also dropped the interest percentage to banks from 3% to 2%. The reduction in collateral requirement is expected to progressively reduce between six to nine months.
Also two per cent of the fund which is N4.5 billion has been set aside to be accessed by entrepreneurs with disabilities. Already about 18 states of the federation are said to have accessed the fund, however no concrete figure has been given of how much has been accessed so far.
While briefing journalists after its second meeting, the National Council on Small and Medium Enterprises (MSMEs) chaired by Vice President Namadi Sambo, the Minister of Industry, Trade and Investment Olusegun Aganga said the Central Bank of Nigeria has also maintained that the all-inclusive interest rate must not exceed nine per cent and had decided to reduce its rate to banks and financial institutions.
Aganga said the report of the committee which was chaired by the Minister of National Planning called for the reduction of the access to collateral requirement and the CBN rate to financial institutions. Also the council said henceforth 60% of the fund will be reserved for women entrepreneurs and priority will also be given to men and women with disability.
In addition to the collateral requirements approved by council, the Minister of National Planning, Abubakar Suleiman also said that the council also approved that the collateral requirements of 50 per cent of Micro Finance Banks be progressively reduced by a period of six to nine months based on the ratings of the micro finance banks (MFBs). The other ones in long terms MFB should be rated by independent rating agency to such that access to MSME funds will be based on their rating
Council also approved that special focus be given to the banks with the strongest infrastructure and capacity for lending to the MSME sub-sector in the CBN strategy. It approved that the loan tenure for micro loans across agriculture value chain be determined on a case by case basis based on the gestation period. “Council also approve the interest rate for the MSME fund to be reduced to two per cent to spend for the participating financial Institutions (PFIs) to further accommodate their cost. Council also approved that the interest rate for the fund be further reduced to two per cent as an intensive for PFIs that have paid for four long circles as at when due” Suleiman said.
Suleiman said council agreed and approved that SMEDAN which is an apex body for coordinating and regulating enterprising activities in the country and the National Planning Commission, the agency for coordinating all monitoring and evaluation activities of agencies in the country, in partnership with Monitoring Unit of CBN, should monitor and evaluate all process for the MSMEs stating that the Council also approved that 70 per cent of the MSME should be disbursed by Development Finance Institutions (DFIs) and micro finance banks, while 30 per cent should be disbursed by the commercial banks. And that at least 40 per cent of the entire fund should be disbursed to micro enterprises. “It was also approved in council, that SMEDAN identifies the key women MSMEs organisations in the public and private sector. The MSMEs from these sectors should then be provided MSME business services by SMEDAN and the accredited service business providers. Subsequently SMEDAN will be required to refer these businesses to PFIs and that is the participating financial institutions” he said.
Council also approved that the CBN should engage the National orientation agency and SMEDAN to assist in disseminating information on the MSMEs fund to all states and local governments.
Aganga said council further deliberated sustainable funding. “That aside from the CBN fund there has to be sustainable funding across the board for micro finance institutions. The council’s focus today was not just on MSMEs but was more on the micro businesses at the grass-root. These are the ones that constitute 99 per cent of the total MSMEs sector and those are the ones that require the support of the federal government. We also agreed that all government programmes should be better coordinated, as a result we are looking at all the funds available and we will be making information available to all Nigerians on the funds that are available and the guidelines on how each one of them can be accessed by the average Nigerian. That should be put on the website and made public for Nigerians.” He added.
The CBN governor, Godwin Emefiele who was also at the briefing said the apex bank remains committed to disbursing the N220 billion MSME facilities to all economic sectors in Nigeria cutting across agriculture, the barbers, mechanics, and hairdressers in different parts of the country. “But we realise that there is the need to embark more on sensitization and awareness and the council has mandated the CBN to work with SMEDAN, National Orientation Agency and other agencies of government to spread the news about this facility so that Nigerians can benefit from it. So far the disbursement are on-going and the initial evaluation shows that the disbursement process is encouraging but we will seek this opportunity to ask that Nigerians come on board and access facility because is meant to create jobs and ultimately result in economic growth and development of our country” he said.
President of persons with disabilities, executive director the disabilities leadership initiative, Adeboye Abioye, said Council also said persons with disabilities were a critical factor in the scheme of things especially with regards to the MSME funds and so two per cent of the funds about N4.5 billion has been set aside to be accessed by entrepreneurs with disabilities. “And what we have also agreed upon is to engage people with disabilities beyond the charity model to be able to engage their values and to see how they can also contribute to economic development in Nigeria. This is the first time and we will like to express our sincere gratitude to President for creating this fund for persons with disabilities and engaging the challenge of this particular group” he said.
The minister of women affairs, Zainab Maina commended the President for setting up N220 billion funds out of which 60 per cent has been specifically for women entrepreneurs and women in business. She urged women to take advantage of the low rate and come out en-masse to access the fund.