The Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) has disclosed that it would soon establish a micro finance bank that would enable operators of micro,small and medium enterprises (SMEs) to access funds to run their businesses without hiccups.
Director General/Chief Executive Officer of SMEDAN, Dr. Dikko Umaru Radda, who dropped this hint in Abuja during a media briefing, explained that multiple problems like lack of funds and high interest rate charged by commercial banks and their stringent conditions had necessitated the latest move by the agency to enable SMEs to have direct access to credit with easily simplified and modern ways of accessing funding.
In view of this, the DG said that SMEDAN had commenced discussions and consultations with the Central Bank of Nigeria (CBN) in a bid to meet their conditions and obtain their operating license.
He, however, explained that the proposed micro- finance institution would start its operations in 2021 and would not be solely owned by SMEDAN, but would also involve private sector operators and cooperatives that would serve as the members of the board of the bank.
“I want to mention to you that in our efforts to address funding challenges among SMEs in Nigeria, SMEDAN is in the pipeline of establishing our own micro finance bank.
“This micro finance bank is to enable SMEs to have direct access to credit with easily simplified and modern ways of accessing funding.
“The requirements by most of these commercial and development banks will not allow micro small and medium enterprises to easily access funds.
“Their interest rate is unbearable. It is the interest rate above 20 per cent.
“What kind of business are you going to do to produce or earn a profit that will enable the operator of SMEs to repay the loan as well as the interest rate?
“We working hard to ensure that we produce a micro finance bank that will assist SMEs operators.This micro-finance bank will not be solely owned by SMEDAN, but it will have some SMEs organisations as well as cooperatives to be on the board of the bank, so that together, we will run the micro–finance bank to meet the challenges of those who need the facilities.
“We are now on the stage of feasibility study and meeting the requirements spelt out by CBN to enable us to have a temporary license to operate.
“This is not new; the CBN had established their own micro finance bank called NIRSAL Micro Finance Bank.”
Radda expressed hope that the bank would start its operations in 2021.
According to him, there are over 41million MSMEs in Nigeria, and 95 per cent of them are not formalised as they are based in the rural areas.
