The Central Bank of Nigeria (CBN) has relaxed the criteria for accessing its N220 billion ring fenced for micro, small, and medium scale enterprises (MSMEs)
It is anticipated that by the end of this year, half of the money would have been disbursed to target operators and the impact felt in the economy.
The CBN is concerned that since the fund was launched on August 19, 2014 only N40.3 billion has been disbursed. Most operators are discouraged by the stringent conditions.
The CBN organised a workshop in Lagos on Wednesday, March 18 to create awareness on how to access the funds, enlighten operators, and commercial banks on the benefit of the National Collateral Registry (NCR) and the amended criteria for accessing the funds.
CBN Head of Relationship Management (MSME Development Finance Department), Tobin Jonathan, disclosed that only “N40.3 billion has been disbursed to state governments, to commercial banks, to MFBs (micro finance banks), to financial cooperatives.
“We have disbursed to 19 state governments … some of them have taken the first tranche of N1 billion; N2 billion mark, and we have disbursed to many MFBs.
“MFBs have received N2 billion so far, commercial banks N814 million, and micro finance institutions N100 million, and we have applications we are also processing. It is an ongoing process.
“We believe that very soon, the effect of this fund will begin to impact on the economy.”
Jonathan disclosed that complaints from MSME operators suggested that the criteria were too strict and difficult to meet, a reason why CBN Governor, Godwin Emefiele, relaxed.
According to him, the participating financial institutions (PFIs) said the collateral was a problem, so the CBN reduced it significantly to improve applications.
The CBN has also addressed all other complaints raised by PFIs, including the spread of profit to cover cost of operations.
“They can collect the forms at 2 per cent and give it out at 5 per cent. So they have 7 per cent spread which is good enough. That has encouraged so many of them to begin to apply,” Jonathan said.
Project Manager for Financial Infrastructure Project to the CBN, International Finance Corporation (IFC) and a resource person at the workshop, Ubong Awah, explained that “we are collaborating with the CBN to establish the National Collateral Registry (NCR) which will be launched by June.”
He said it is important as part of effort to stimulate funding for the MSME sector stressing that the NCR will provide part of the infrastructure for progressing the initiative.
His words: “So we are here to create awareness on this, and also enlighten operators, the banks together with the CBN on the benefit of collateral registry. The MSME sector is important. And financing in that sector is something that also needs to be attended to.
“It needs some level of capacity. Some level of capability we are bringing to the table because we are involved in many projects on this. We are collaborating with the government to do this.
“So we are bringing expertise and experiences we have over the years and all over the world to make it available to credit offices with the understanding that they will be knowledgeable in this, better equipped and enabled to better drive the process.”
The CBN last year set aside N220 billion for disbursement to qualified MSME entrepreneurs.
Male entrepreneurs are entitled to 40 per cent of the fund and female 60 per cent.
However, almost one year since the fund was launched with funfair, entrepreneurs could not access it.