BY PROVIDENCE OBUH

Accessing the Microfinance Development Fund (MDF) and the N200 billion Small and Medium Enterprises Credit Guarantee Scheme (SMECGS), will be based on the viability of the applying institutions, says Minister of State for Finance, Dr Yerima Ngama.

Speaking at the Annual Lecture of the National Association of Microfinance Banks (NAMB) Abuja, Ngama said that the development funds and the N200 billion SMECGS, established for the sub sector is now available for institutions who meet eligibility criteria.

The Minister who spoke through the Managing Director, Nigeria Deposit Insurance Corporation (NDIC), Alhaji Umaru Ibrahim also noted that the Central Bank of Nigeria (CBN) and other relevant agencies of government would have to come out with a clear framework for qualified institutions.

He said, “I am aware that participants are eager to hear and obtain my commitment on behalf of government on when it will make the development funds and the N200 billion SMECGS established for the sub-sector available to eligible institutions.

“The good news is that, indeed both funds have been established, but the drawing rights for both funds will be based on viability of the applying institution. Despite the September 2010 mass liquidation of 103 microfinance banks, the challenges are still visible.”

Speaking on the challenges of the sub-sector, Chief Executive, Bank of Agriculture, Dr. Mohammed Santuraki said that the major challenge of the Nigeria MFBs has been the absence of a development fund where the MFBs could access cheap funds. To this end, Santuraki lamented that the MFBs have been forced to engage in unfair competition for deposits with commercial banks in the urban and semi-urban areas.

“Except the MDF was launched without delay, the MFBs would be unable to play their required role by supporting MSMEs which currently accounts for over 70 per cent of employment in the country.”

On the other hand, the Central Bank of Nigeria (CBN) Deputy Director in charge of microfinance issues, Mr. Akintunde Sowunmi explained that the apex bank established the MSMEs Development Fund to provide liquidity support for MFBs.

According to Sowunmi, “The funds will cover refinancing, guarantee and wholesale facilities through various windows to support the MFBs to lend to entrepreneurs.”