The Federal Government has slashed the collateral requirement for banks to access the N220bn intervention fund for the Micro, Small and Medium Enterprises (MSMEs) sector from 75 per cent to 50 per cent.
The decision was taken at the second meeting of the National Council on MSMEs presided over by Vice President Namadi Sambo at the Presidential Villa, Abuja on Tuesday.
Before the downward review, part of the conditions for banks to access the N220bn fund was the need for them to collaterise whatever amount they were applying for from the CBN to the tune of 75 per cent.
The Minister of Industry, Trade and Investment, Mr. Olusegun Aganga, announced the decision at a press briefing held at the end of the meeting.
He said the decision was taken based on the recommendations of a sub-committee chaired by the Minister of National Planning, Dr. Suleiman Abubakar, and contribution made by the Governor, Central Bank of Nigeria, Mr. Godwin Emefiele, during the meeting.
Aganga said, “Based on the comments of the CBN governor, the council took certain decisions. The first is that access to collateral requirement, which was initially 75 per cent and made it difficult for some commercial banks to be able to access has been reduced to 50 per cent.
“All inclusive interest rate must not exceed nine per cent. That has always been the directive of the CBN and we have stuck to that. However, the CBN is disbursing to these banks and the financial institutions and others at two per cent from the original interest rate of three per cent.”
The minister added that on the need for women to have access to the fund, President Goodluck Jonathan had directed that about 60 per cent of the fund should be made available to women.
Aganga said men and women with disabilities had also been prioritised in the disbursement of the fund.
Abubakar said in addition, the council had approved that the collateral requirement of 50 per cent for micro finance banks be progressively reduced by period of six to nine based on the ratings of the MFBs.
He added, “We also approved in council that special focus be given to the banks with the strongest infrastructure and capacity for lending to the MSME sub-sector in the CBN strategy. Council also approved that the loan tenor for micro loans across the agriculture value chain be determined on a case-by-case basis based on the gestation period.
