The Bank of Industry (BoI) is expanding its partnership with microfinance banks to increase access of small businesses to micro credit, according to the Managing Director, BoI, Mr. Olukayode Pitan.
Pitan said the move is in line with the bank’s mandate to execute the Government Enterprise and Empowerment Programme aimed at providing micro credit to 1.6 million beneficiaries nationwide within one year.
Pitan added during a technical session aimed at deepening the BoI’s partnership with the MFBs that about N4bn had been disbursed to qualified beneficiaries of GEEP in 31 states and the Federal Capital Territory.
He remarked that the session was the first of five sessions to be held with all licensed MFBs in Nigeria, adding that they had been grouped into regions for ease of attendance.
He said, “These sessions came about as a result of the need to resolve all issues that have hitherto limited the expansion of the BoI’s partnerships with the MFBs.
“The BoI understands the key role the MFBs play in bridging the financing gap experienced by micro enterprises in the Nigerian economy and seeks to align with the MFBs to promote financial inclusion and deepen its activities of driving economic growth among people at the bottom of the pyramid.”
He acknowledged the role of the MFBs in driving financial inclusion in the country, adding that the MFBs were vital to ensuring that flow of capital would reach those at the bottom of the pyramid.
He said, “Whereas formal financial institutions are mandated to provide access to finance to enterprises in the economy, their operational activities are unable to reach the grass-roots segments. This is where the microfinance institutions function as enablers to bridging this financing gap.
“In countries that have vibrant MSME segments, micro finance institutions have been major contributors to reducing poverty and increasing the earning powers of micro enterprises.”
In his remarks, the National President, National Association of Micro Finance Banks, Mr. Valentine Whensu, noted that in granting credit to micro enterprises, the MFBs took into consideration a lot of cost and risk factors such as the cost of financial infrastructure, the interest rate, the CBN guidelines on disbursing loans by the MFBs and training of personnel for effective loan monitoring.
He appealed to the BoI to assist in capacity building for the MFBs so that the personnel would be well equipped to recover loans, noting that after the low interest rates on intervention/government funds, not much was left over for the MFBs to shoulder the administrative burden.
