If the Central Bank of Nigeria (CBN) goes ahead in cutting the rates at which Participating Financial Institution (PFIs) can access the N220 billion Micro Small and Medium Enterprise (MSME) development fund, it will go a long way in addressing the challenges of accessing the fund by microfinance banks.
There have been several complaints by operators of microfinance banks over the stringent conditions in accessing the fund.
BusinessDay investigations show that over 60 percent, out of the over 800 microfinance banks (MFBs) operating in the country, may not have access to the fund because of not being able to meet the conditions stipulated in the guidelines for accessing it.
Some of the MFB operators, who spoke with BusinessDay, say they cannot meet with the requirements of accessing the fund, as they are too stringent.
The conditions to be satisfied by eligible MFBs/finance companies as obtained from the latest CBN and the Nigeria Deposit Insurance Corporation (NDIC) examination reports, and as contained in the guidelines include Compliance with Regulatory Capital, Compliance with prevailing Prudential Ratios, Average deposit growth rate of 20 percent per annum (for institutions operating for over two years), Average clientele base growth rate of 20 percent per annum (for institutions operating for over two years), Risk Management Framework acceptable to the regulators, Corporate Governance Culture acceptable to the regulators and as indicated by: Adherence to Sound Ethical Values, Degree of Separation of Ownership from Control/Management, Number of non-performing Insider Related Facilities, Evidence of Membership of apex association and up-to-date payment of annual subscription, Compliance with up-to-date and timely rendition of monthly returns to the CBN as stipulated in the revised Microfinance Policy, Regulatory and Supervisory Framework of Nigeria.
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Usman Onoja, managing director/CEO, Lovonus Microfinance Bank Limited, had been worried that since the launch of the fund in 2013, “up till this moment, we have not seen any institution that benefited from the scheme.
“It’s all lip service, we hope they will eventually make it available to us,” he said in an e-mailed response.
However, BusinessDay report shows an indication that the CBN may cut the rate at which the PFIs access the fund to 2 percent, as it tries to remove those impediments frustrating prospective beneficiaries.
BusinessDay gathers that only those MFBs that are sound would have access to the fund.
The CBN last month attributed the low access to the N220 billion MSME Development Fund to poor status of the PFIs, specifically MFBs.
The PFIs include MFBs, microfinance institutions, financial corporatives, finance companies, and deposit money banks – Bank of Industry (BoI), Bank of Agriculture (BoA).
The CBN disclosed in December 2014 that about N769 million of the fund had been accessed by six participating finance institutions, while N1.3 billion had been released to state governments for onlending through MFBs, so far.
HOPE MOSES-ASHIKE
