NIRSAL MFB to offer loans to SMEs at 5% interest rate

NIRSAL Microfinance Bank would provide loans to small businesses at a single digit interest rate of five per cent, according to CBN Governor.

Governor of the Central Bank of Nigeria, Mr Godwin Emefiele, said NIRSAL Microfinance Bank will start offering loans to small businesses at a single digit interest rate of five per cent.

Mr Emefiele made the disclosure, Wednesday, during an inspection tour of the bank’s facilities located in Gwagwalada, Abuja. According to him, the newly-established MFB has been mandated to do everything possible to empower small businesses across Nigeria.

According to him, NIRSAL Microfinance Bank’s target is to have a total of 774 branches across the local governemnt areas in the country. So far, only five branches have been established, even as fifty new branches are being planned for the next phase.

Other pilot phases for NIRSAL Microfinance Bank are: Ibadan, Bauchi, Kaduna, Enugu, Lokoja, and Port Harcourt, Mr Emefiele said.

Speaking further, Mr Emefiele said that the new microfinance bank, which has N5 billion worth of capital base, is expected to help the CBN actualise its 80% financial inclusion target by 2020.

As we reported, the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) unveiled the new national Microfinance Bank (MFB) earlier this year, with the intention to catering to over 400,000 Small and Medium Enterprises (SMEs) within its first two years. It is wholly-owned by the Central Bank of Nigeria.

Mr Emefiele said the loan scheme would be financed with money from the Agribuisness/Small and Medium Enterprises Investment fund. The repayment period for every loan is five years. There will be a two year moratorium.

“The biggest problem that small businesses always have is access to credit and I am happy that with the establishment of this microfinance bank, which will be in at least one local government and we are talking about the 774 locations across the country.

“We will be able to have a financial institution that will help to deepen financial inclusion to make it easy for people to access credit, particularly the small and unbanked people, because we have always said that these are the very weak.

“We will use this to improve access to credit. Interest rate for this will be at five per cent and the loan will be for a tenure of seven years with two years moratorium.”

No Collateral issue

Meanwhile, bearing in mind that some businessmen have issues with collaterals, Mr Emefiele said that NIRSAL would give out loans without using the conventional collateral requirements.

He said “We know that those who are weak in terms of those who are unable to access credit, the big issue for them is their inability to provide collateral.”