The new National Microfinance Bank being set up by the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL), the Nigeria Post Office and the Bankers Committee will take off with N5bn initial capital, Governor of the Central Bank of Nigeria, Godwin Emefiele said on Wednesday.
The Bankers Committee provided the set-up equity capital and owns 50 per cent of the bank, while NIRSAL and NIPOST own 40 per cent and 10 per cent respectively.
Speaking at the inspection of the Gwagwalada branch of the bank ahead of the official launch, Emefiele said that the loans under the MFB would be disbursed at five percent interest rate for a tenor of seven years and two years moratorium.
The governor further explained that the loan would be deployed through the Agri-Business Small and Medium Enterprises Investment Scheme (AGSMEIS) -an initiative of the Bankers’ Committee which complements the Federal Governments’ efforts at promoting Agri-businesses/Small and Medium Enterprises as a vehicle for sustainable economic development and employment generation.
NMFB, the first in the country is projected to reach an estimated 400,000 SMEs within the first two years of operation.
The new microfinance bank would have an extensive branch network with planned presence in all 774 local councils of the Federation and the FCT.
Emefiele said new institution would particularly expand available options and empower Small Medium and Small Enterprises (SMEs) across Nigeria with structured microcredit to help them establish and expand their businesses.
Explaining the modalities for the deployment of the loans, he said, “We know that for those who are unable to access credit, the big issue is their inability to provide Collateral.
“They will be able to access credit without providing collateral., but the asset that we are financing for them will act as the collateral which will be registered in our national collateral registry as something that is eligible to serve as collateral for loan.
“The target is for 774 branches in all the local governments in the country. We are just inspecting one out of the first seven and we are scaling up to the next 50 in the next phase.
“We believe that before the end of this year, we would have moved substantially in making sure that they are set up and be able to provide finance to small businesses.”
The governor assured that the bank would heavily deploy financial technology and run with less cash for operations.
He said the specific objectives include: to drive and deepen financial inclusion; to provide easy access to credit and other financial services to SMEs; to reduce unemployment rate in the rural areas; and to reduce rural-urban migration.
“We ve have already set a target for ourselves that by 2020, the rate of financial inclusion must increase to 80 per cent from about 48 per cent a year and a half ago.
“So this is just part of our initiative to deepen financial inclusion in Nigeria.
On fears that the national MFB would likely crowd out other existing MFBs, Emefiele explained, “The existing microfinance are doing their best and this is not an attempt to crowd them out but to complement their services and ensure that whatever services is being provided by these microfinance banks should be seen to be fair to their customers.
“I also know about the rural communities where the microfinance banks charge very prohibitive interest rate but here we are talking about making fund available to these people.
“This will help to create some form of competitive landscape so that those kind of practices will no longer arise.
Onyinye Nwachukwu, Abuja
