The Central Bank of Nigeria (CBN) will commence the disbursement of the N220 billion Micro, Small and Medium Enterprises (MSME) Development Fund from August.
The Fund, which was launched last year by the apex bank under its micro-credit programme, was targeted at reducing poverty amongst the poorest of the poor across the federation, as part of its financial inclusion strategy for rural communities in the country.
Under the programme, each of the 36 states and the Federal Capital Territory (FCT) , would be entitled to access as much as N2 billion . But the funds will not be disbursed to the states directly but through banks which are expected to effect the disbursements directly to the beneficiaries to be selected, based on conditions which have already been stipulated by the apex bank.
The micro credit is at single digit interest rate and the CBN has equally put in place a robust monitoring mechanism in place to ensure that the funds are not diverted by the banks but disbursed strictly to the targeted range of people at the lowest rung of the Nigerian social ladder, at the recommended single digit interest of not more than nine per cent.
The CBN Governor, Godwin Emefiele, who disclosed the development Thursday when some governors and their representatives met him to sign a memorandum of understanding ( MOU) for the implementation of the scheme, also announced that 60 per cent of the beneficiaries of the credit scheme must be women traders or entrepreneurs.
The governors of Akwa Ibom, Delta , Osun and Oyo Sates were physically present at the MoU signing ceremony, while Bayelsa, Gombe, Enugu , Ondo Benue, Borno , Imo , Taraba and Zamfara states were either represented at the event.
Emefiele, at the ceremony said: “The number of state governors present here today (yesterday) attest to the importance of this event . The MSMEs are globally recognised as critical means of economic growth due to their potentials to create jobs , boost production , generate income and reduce poverty. Despite this role, the MSMEs in Nigeria has never received enough fund to play this pivotal role .
“According to a joint report by the International Finance Corporation and McKinsey, the financing gap of this critical sub sector of the Nigerian economy is about N9.6 trillion as at 2010. In order to close this gap and unlock the potentials of the Nigerian MSMES the CBN has initiated this N220 billion Fund as an innovative way of improving the access to finance at single digit interest rate, shoring up their potentials for job creation and enabling them reduce poverty within the country.
“The MSMEs Fund will be disbursed and administered through the commercial banks . State governments will be able to access up to N2 billion each for on -lending to eligible beneficiaries through participating financial institutions in their States. The scheme is directly in conformity with our resolve to create a professional and people oriented CBN that would act as a financial catalyst for job creation and inclusive economic growth in our country.
“Our optimal goal is to see that this Fund get to our people at the bottom of economic and social pyramid at single digit interest rate .without achieving this ultimate goal , it will impossible to achieve job creation and poverty reduction . In order to ensure the attainment of our goal therefore, the CBN will be committing human , material and financial resources to monitoring both the disbursement and utilization of these funds in a robust and verifiable manner.
“Participating financial institutions would be required to submit periodic returns on disbursement as well as analysis of the social impact of this fund on our people. The CBN will also undertake regular on-site and off-site checks to ascertain the veracity of the report received from the banks . I, therefore enjoin your Excellencies to help us achieve these goals by ensuring that these funds are deployed in an effective and efficient manner. “
The governors present commended the CBN Governor, saying that it will definitely complement similar social programmes already adopted by them.
The Governors of Akwa Ibom, Delta and Osun, at the occasion, pledged to write off the interest rate for beneficiaries in their respective states as part of their contributions to alleviate their burdens and help them repay the principal easily.