4 January 2013

Nigeria: Operators Say Micro Bank Customers Should Expect Lower Lending Rates

Some operators of microfinance banks yesterday expressed optimism that lending rates in the sub-sector would drop thsis year, 2013.

They said that lending rates in the sub-sector would drop as soon as operators were able to access the Micro Small and Medium Scale Enterprise Development Fund of CBN in 2013.

Managing Director of Olive Microfinance Bank Mr. Eniola Agbesoyin told the News Agency of Nigeria (NAN) in Lagos that the CBN had released N220 billion from the fund to assist the microfinance sub-sector. Agbesoyin said that the fund was launched on October 23, 2012, but was yet to be accessed by microfinance banks.

He said that the fund would reduce the lending rate in the sub-sector as its interest rates ranged between three and eight per cent.

"Funds from the CBN always come with cheaper interest rates. "Once the fund effectively takes-off, it will affect the current lending rates in microfinance banks because it will attract minimal interest rate from the apex bank," he said.

Agbesoyin said that microfinance banks were created to assist the poor to grow their businesses, but that funding had been the major challenge. He commended the CBN for the intervention fund, stressing that it would enable them serve the poor better.

Mr Valentine Whensu, the Chairman, National Association of Microfinance Banks in Lagos State, said that the apex bank had not released guidelines on the disbursement of the fund.

"Though we will access the fund, I don't know the modalities yet. Again the fund is also meant for cooperative societies. However, it will improve business activities in the microfinance sub-sector when it is finally accessed," Whensu said.

Mr Johnson Ehikhamhen, the General Secretary, NAMB, Lagos State chapter, said that the interest rates would also depend on the capitalisation and customer-base of each bank.

Ehikhamhen said that the injection of the fund would give customers a sigh of relief because it would bring down the lending rates.

Mr Dele Oyekanmi, the Chief Executive Officer, MoneyWise Microfinance Bank, urged the government to give more support to the sub-sector, adding that the sub-sector was the best vehicle to reach out to the poor.

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