Nigeria reduces interest rate on MSMEs fund

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AgangaReports by Voice of Nigeria, says the National Council on Micro, Small and Medium Enterprises in Nigeria has approved the reduction in requirements needed to access funds for the development of SMEs in the country.

The council, chaired by Vice President Namadi Sambo, at its second meeting at the State House Abuja, also agreed that interest rates on  all loans under the N220 billion SMEs fund should not exceed nine per cent.

Briefing State House correspondents after the meeting, the Minister of Trade and Investment, Dr. Olusegun Aganga said the decision was to allow Nigerians access the loan in the shortest possible time.

He said that the meeting also suggested a sustainable funding for the development of the country’s small industries in line with its industrial revolution plan.

“The first is that access to collateral  requirements which was initially 75 percent‎ which 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 percent. That has always been the operative 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 percent from the original inter rate of three percent,” Aganga said. 

Dr. Aganga said special consideration would be given to commercial banks with strong capability to provide loans for the development of SMEs.

“This was important because the mirco businesses at the grassroot constituted 99 percent of the total MSMEs‎ sector and those are the ones that require the support of the federal government.”

Also speaking, the Minister of National Planning, Prof. Suleiman Abubakar, announced that the council approved that the collateral requirements of 50 percent of micro finance banks be progressively reduced ‎based on the ratings of the banks.

He said “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.”

The fund domiciled in the Central Bank of Nigeria ( CBN), was launched by President Goodluck Jonathan last year.

Out of the allocated SMEs fund, 60 percent would be given to women entrepreneurs while four percent to the physically challenged individuals.

In a related development, the  Presidential Jobs Board chaired by the Vice President has announced  plans to develop a National Jobs Bill aimed at fast-tracking government’s target ‎of creating two million jobs for Nigerians yearly.

Aganga disclosed this to State House correspondents after a meeting of the Board in the State House.

He said consultations were ongoing to fine-tune the draft bill before its transmission to the National Assembly for passage into law.

According to him, about 1.4 million jobs were currently being ‎created annually.

He said the board would comply with President Jonathan’s directive to work with the private sector to raise the number of jobs created annually to two million.

 

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