CBN Eases Collateral Terms For SME Loan

CBN building

The N220 billion Micro Small and Medium Enterprises, MSMEs, fund being packaged by the Central Bank of Nigeria, CBN, would be given to entrepreneurs without the conventional collaterals to make it easier for them to access capital for their businesses.

CBN’s Director of Development Finance, Mr. Paul Eluhaiwe, said this at the end of the MSME Financing Conference and D-8 workshop in Abuja, weekend.

He said that entrepreneurs would be able to use movable collaterals to secure credits from financial institutions from next year.

According to him, the necessary approval of management of CBN had been secured and “we will ensure that collateral registry are movable collateral and we would be able to use it beginning from next year in this country.”

He added that CBN wanted a situation where MSMEs would “be able to use movable collateral, and we are working with the International Finance Corporation, IFC, on this development.

“If this is done, operators will be able to operate because there would be funds and capacities would be built to create sustainability in the sector.

“Entrepreneurs themselves, who are supposed to benefit, with movable collateral will have access to more financial services.”

Most banks are not ready to support SMEs with facilities because they feel they do not have the collaterals and banks depend only on fixed collaterals in this country.”

Mr. Eluhaiwe disclosed that the N220 billion MSME development fund would be available for disbursement as from next year, a situation he said would boost the MSMEs in an unprecedented manner.

“That is what we are concentrating on. We know that before December, we would have worked out all the issues to make it work for us as a country because we know that it is required for us to move forward”; he said.

Between now and next year, the director said the apex bank would concentrate efforts on “building capacity, providing resources, things will work in that sector in addition to the regulatory framework.”

Under the proposed fund, grants would be given to Microfiance banks to strengthen their operations; the credit component, the guarantee component and the refinancing component for the sector to work.

Consequently, microfinance banks in the country are being evaluated and those rated to have performed creditably well would benefit from the fund. 32 of such microfinance banks have already been selected. [Vanguard]


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