The House of Representatives yesterday described as too high, the nine per cent lending rate fixed by the Central Bank of Nigeria (CBN) for institutions seeking to access the N220 billion Micro, Small and Medium Enterprises Development Fund (MSMEDF).
Following the adoption of a motion on the matter moved by Mr. Patrick Ikhariale (PDP, Edo), the House said the rate “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.â€
Continuing, he said: “Despite the fact that micro-finance banks are currently charging between 30 and 40 per cent as interest, the 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 and defeat the aim of the scheme.”
Consequently, the House mandated its committee on banking and currency to liaise with the Central Bank of Nigeria (CBN) to ensure adequate monitoring of the N220 billion for micro-finance banks across the country.
It also urged the CBN “to closely and carefully monitor the implementation of the scheme in order to prevent corrupt practices by bank owners or their privies that may appropriate funds.”
In his motion, Ikhariale noted that the fund was aimed at addressing the financial challenges experienced by MSMEs, saying notwithstanding its intention, “there are obvious hurdles envisaged in its implementation.”
He said going by CBN’s statement, the fund would be made available to Participating Financial Institutions (PFI), thereby improving their capacity to meet the credit needs of MSMEs.