The Central Bank of Nigeria (CBN) finally launched the much awaited N220 billion Micro, Small and Medium Enterprises (MSME) Development Fund yesterday, saying it would disburse the money at interest rate of no more than nine per cent per annum to microfinance banks for on-lending to the micro and small businesses.
CBN Governor, Sanusi Lamido Sanusi speaking during the formal launch of the fund at the 7th annual MSMEs finance conference and D-8 workshop on micro-finance for SMEs in Abuja, yesterday, said the Fund is to improve access to affordable and sustainable sources of finance by microfinance institutions and microfinance banks.
Sanusi also announced an interest rebate component for women in the fund so women businesses who borrow from MFBs are able to access these funds for interest rate subsidy to make sure that they do not pay more than nine per cent interest on their loans.
He said the bank would not be lending directly to businesses, but that the loan would be disbursed through the MFBs.
According to him, "The CBN will not be lending directly to farmers or businesses. What this fund does is a wholesale fund, it provides funding to the participating financial institutions. If you are a
Micro Finance Bank in Benin, you can come to this fund. We assess you, we give you the money at low rate of interest long term, and then you undertake that you will lend at low rate of interest. Today commercial banks charge 21 per cent and MFBs charge 30 to 40 per cent interest rate. We are not going to get anywhere near there.
According to Sanusi, the Fund will operate as "a merit-based, incentive-based system where the microfinance bank will earn the right by performing to get even better credit terms from the fund."