10 December 2018

Nigeria: Banks Contributions to Agro-Business, SME Investment Scheme to Hit N90 Billion - Emefiele

Lagos — Governor of Central Bank of Nigeria, CBN, Mr. Godwin Emefiele, said yesterday, that banks' contributions to the Agro-Business/Small and Medium Enterprises Investment Scheme, AGSMEIS, will hit N90 billion by the end of this year.

Meanwhile, the Bankers Committee, at the end of its annual retreat yesterday, rolled out measures to facilitate credit to exporters in a bid to boost the nation's non-oil revenue.

Emefiele disclosed this in Lagos, while addressing the press on the outcome of the 10th annual Bankers Committee retreat.

He also disclosed that the national microfinance bank to be set up by the committee, in collaboration with NIPOST, will offer low interest credit to entrepreneurs across the country.

Speaking on banks' contributions to the scheme, Emefiele said: "The AGSMIES fund by December this year will have N90 billion. That is part the funds that will go to support those that are going into farming or trading or those in music or fashion industry."

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Emefiele said in the light of recent economic shocks around the world, the committee decided to tackle issues that made it difficult for exporters to access credit, as part of measures to boost non-oil export.

He said: "This year, the theme of the retreat centred around export-led transformation of the Nigerian economy as an engine for sustainable, inclusive growth in Nigeria.

"For this year, we came and said, given the economic volatility and critical development in the Nigerian financial system, it is important that we renew our focus on non-oil exports that will help to catalise economic growth and also eliminate over dependence of our country on crude oil as a major source of earnings.

"We are saying there are challenges around, there are exogenous shocks happening in different parts of the world, which could ultimately constrain the capacity of the country to generate export revenues, particularly from crude oil and there is a need for us to think about how do we diversify our source of revenue earnings into non-oil export sector of the economy?

"We have decided to set up a committee headed by a bank chief executive officer. What that committee will do is to take a deep dive into some of the issues and challenges faced by exporters and then report back to our February 2019 meeting to raise some of the issues, and through that, the banks themselves will commit to ensuring that we deploy funds either on a commercial basis through banks or some of our intervention funds at the CBN to support this initiative.

"You will recall there was a time we contributed N500 billion to support export activities so as to boost export business and also help in generating export earnings into the country.

"We took a review and saw that that aspect has not really quite permeated the system and we wanted to hear from some of the export companies what their challenges were and that was the reason we set up the committee to look into these issues.

"But this time, we are determined that they will get the support they need and make it easy for them to get the credit but at the same time, put in place policies that will ring-fence the export earnings in a way that the funds come in and are used in a way that is beneficial to the economy."

Rationale for a National Microfinance Bank

Justifying the decision of the Bankers Committee to set up a National Microfinance Bank, in collaboration with NIPOST, Emefiele said: "The existing MfBs are doing their best but they are not lending at single digit interest rate.

"Some of them are even lending money on flat, where you borrow N50,000 from them for 90 days and they expect you to pay another N50,000 as interest in 90 days. That is outrageous and too exorbitant and we feel that if we have these funds available in the CBN, through our own National Microfinance, we can make access to funds easy, even if it is not single digit at 9.0 percent per annum, even if it is 15 percent, it is much lower than those borrowing money on what is called flat arrangement basis."

Emefiele had earlier in his opening address, disclosed that the Bankers Committee in collaboration with the Nigerian Postal Service (NIPOST) will establish a national Micro Finance Bank (MFB) to enable speedy disbursement of its several intervention funds including the Agribusiness/Small and Medium Enterprises Investment Scheme (AGSMEIS).

Emefiele said the national MFB slated to launch next month would leverage on the existing NIPOST presence in 774 local and aide the CBN and the bankers committee effort in accessing the Anchor Borrowers fund, SME fund and other initiatives tailored towards SMEs, farmers and the CBN's financial inclusion drive.

He also said this was to help ensure the success of the N26billion set aside to finance agric businesses and other small informal businesses under the Agribusiness/Small and Medium Enterprises Investment Scheme, AGSMEIS.

"Today, the central bank has N220 billion that is set aside under the micro small and medium enterprise fund. Nigerians were happy when they heard that the banks, out of their magnanimity, decided that five percent of their profit would be set aside to support Agric business and SMEs.

"We have over N60 billion sitting currently in CBN and why should that money be sitting in CBN and just be earning treasury bill rates. It is meant for the micro small and medium enterprises and for the weak in our economy that would not ordinarily have access to knock at your door.

"That was why we voted last week at bankers' dinner, that a national micro finance bank would kick off by January 2019.

"In order to collectively address the concerned challenges militating against achievement of the objective of the AGSMEIS initiative, the CBN is considering the proposal for the establishment of the national microfinance bank which would leverage on the Nigerian postal service presence in 774 local government areas across the country.

"We have called on NIPOST and they have agreed to join us in this. They would provide their facilities in 774 local governments and this would be their own contribution by way of equity into the establishment of the national MFB.

"We would provide the infrastructure and this MFB would be available in 774 local government across the nation."

He added that it expected that the bankers committee and NIPOST would have representation on the board of this national MFB.

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