FG Sets Up N200bn SME Guarantee Fund

The Federal Government has announced that the much expected N200 billion small and medium enterprises credit guarantee scheme (SMECGS) fund is now available.

The Minister of State for Finance, Dr Yerima Ngama, who disclosed this in Abuja yesterday, however said the Central Bank of Nigeria (CBN) and other relevant agencies of government would have to come out with the eligibility criteria for applying institutions.

Ngama who spoke during the second Annual Lecture Series of the National Association of Microfinance Banks (NAMB), Abuja Chapter, said that both the SMECGS and the Microfinance Development Fund (MDF) have been established but added that the drawing rights would be based on the viability of the applying institutions.

“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 small and medium enterprises credit guarantee scheme established for the subsector available to eligible institutions.

“The good news is that, indeed both funds have been established but the drawing right will be based on the viability of the applying institutions,” said the minister who was represented by the Managing Director, Nigeria Deposit Insurance Corporation (NDIC), Alhaji Umaru Ibrahim.

As the operators of MFBs continue to clamour for the taking off of the MDF, the Bank of Agriculture (BOA) is canvassing for the use of the N42 billion SMEEIS fund as seed money for the fund.

Also speaking, Managing Director/Chief Executive Officer, BOA Dr. Mohammed Santuraki, however advocated that the N42 billion SMEEIS fund transferred to a non-performing Micro Credit Fund should constitute the seed money for the fund
Santuraki, who noted that the main challenges of MFBs in Nigeria has been the absence of a Trust or development fund, from where the MFBs could access cheap MFBs have been forced to engage in unfair competition for deposits with commercial banks in the urban and semi-urban areas.

He maintained that except the MDF was launched without delay the MFBs would be unable to play their required role by supporting micro, small and medium enterprises which currently account for 70 per cent of employment in the country.

Managing Director, Future Growth Microfinance Bank Limited and Chairperson of NAMB, Frances Bekey said the association was going to look into the issue of the huge debt portfolio.

“Who are going to look at why they are borrowing and not repaying and help each curb this issue because it is affecting every MFB. What we find is that someone borrows from bank A, goes to bank B to borrow and still, goes to bank C. They keep borrowing without repaying. We have a committee working on that already,” she said.