Teddy Oscar, Abuja
The House of Representatives on Wednesday called on the Central Bank of Nigeria (CBN) and Nigerian Association of Chambers of Commerce, Industries, Mines and Agriculture (NACCIMA) to closely and carefully monitor the implementation of the fund so as to prevent corrupt practices by bank owners or other privies, who may appropriate the N220 billion Micro, Small and Medium Enterprises (MSME).
The House also urged CBN to liaise with NACCIMA to ensure that the disbursement and release of the fund get to those the fund is meant for.
The intervention fund is set aside by CBN to address the challenges being experienced by the Micro, Small and Medium Scale Entrepreneurs (MSMSEs), but micro finance banks (MFBs) could borrow the fund at 9 percent interest rate, and in turn, lend to MSMSEs.
The resolutions by the House followed a motion by Hon. Patrick Ikhariale on the ‘urgent need to monitor the intervention fund set aside for MSMEs by CBN’.
Ikhariale observed that the fund, which would be made available to Participating Financial Institutions (PFIs), is faced with challenges.
“The fund is expected to improve the capacity of MSMEs and meet their credit needs. The CBN governor (Sanusi Lamido Sanusi) stated that the fund specifically made provision for micro-credit, which has been identified as a way to combat the prevalent poverty rate in the country, and empower Nigerians to embark on ventures that would enable them become self employed. Despite the laudable nature of the fund, there are obvious hurdles envisaged in its implementation,” he observed.
He particularly expressed concern that the fixed lending rate is rather high, considering the fact that a chunk of it is reserved for women.
“The fund has made specific provisions for small farmers and women entrepreneurs towards facilitating efficient produce marketing in order to reduce post harvest losses; in the same vein, 60 percent of the fund has been reserved for women to ensure that they have easy access to credits. (But) the 9 percent lending rate ceiling fixed by CBN seems rather high, considering the group of people the fund is meant for, who are mainly artisans, small farmers engaged in subsistence farming and small scale business owners.
“Despite the fact that MFBs are currently charging between 30 and 40 percent as interest, CBN has granted them powers to fix the rate of interest when they lend to industrialists; a situation that, if not properly monitored, may be abused by their fixing interest at the rate they are currently charging,” he said.
Worried that the high interest rates would defeat the aim of the scheme, if the fund is not properly monitored, the lawmaker urged CBN to find a way to put a limit on the amount chargeable as interest, which could be mutually beneficial to both MFBs and the borrowers.
Speaking in support of the motion, Hon. Leo Ogor, however, suggested that due process should be followed in the disbursement and release of the fund.
In his contribution, Hon. Fort Dike observed that the fund was created to encourage the growth of a particular area of the economy.
“The motion is not talking about the modalities of disbursing the fund; it is, however, about the good intention of CBN to create it to be sustained,” he added.
While supporting the creation of the fund, Hon. Uche Ekwunife observed that every economy depends on Small and Medium Enterprises (SMEs) to survive.