Accessing The N220 Billion MSME Loan

On August 19, 2014, President
Goodluck Jonathan launched the
N220 bn Micro, Small and Medium Enterprises (MSME) fund to facilitate the growth of small businesses in Nigeria.
While 60 percent of the fund is to be channeled towards women entrepreneurial development given their proven commendable performance in business, states are eligible to access N2bn which is to be administered by commercial banks.
The scheme has been commended by financial sector operators, other stakeholders and MSMEs as one that has capacity to reduce poverty and create jobs that would enhance socio-economic development.
While we commend the scheme, we cannot fail to underscore long-standing concerns over hijack of similar schemes in the past by influential persons from persons they were intended for.
The spread and most of the eventual beneficiaries had been questionable, thereby negating the noble objectives of previous schemes of this nature.
These concerns are even more serious in this era of politics in which the scheme is exposed to the risk of partisan interests.
Over the years, experience has shown that provisions of this nature hardly get the targeted groups in Rivers State.
The lack of proper sensitisation and absence of technical support for wouldbe beneficiaries have also accounted for the diversion of such schemes from the targeted group.
Happily, the Central Bank of Nigeria (CBN) has not only earmarked 60 percent of the loan to women but also N2bn to each state of the federation.
The Tide hopes that as states access the loans, the percentage allocated to women would be respected. It is also hoped that micro businesses, small and medium enterprises and the socially-disadvantaged, including the physically challenged persons and albinos are equitably covered.
The State Ministry of Commerce and Industry should ensure adequate encouragement of women and sensitization of the citizenry on the need to benefit from the loan through co-operatives and MSMEs.
Indeed, the judicious spread of the funds to intended beneficiaries should be of paramount concern to the ministry.
In order that schemes of this nature are sustained, the authorities should ensure that the loans are paid back as and when due. It should not be seen as part of the national cake as had been the fate of some schemes in the past.
It has also become necessary for Non-Governmental Organisations and Community Based Organisations to play a more robust role in the sensitization of Nigerians in remote areas to enable them access this and other pro-poor schemes.
This they can do, particularly for women and physically challenged by helping them access the application forms based on the CBN guidelines and submitting the completed forms directly to relevant authorities.
There is also the need for authorities to formulate policies that would promote and protect small local businesses. Clearly, with the importation of cheaper products that could be produced locally, very little chance exists for the survival of the micro, small medium entrepreneur and his/her products.
Furthermore, the CBN should ensure that Microfinance Banks do not over-charge MSMEs. We are aware that the CBN charges Microfinance Banks 3 per cent interest on MSME loans while MFBs are to charge entrepreneurs 9 percent on the loan. This must be strictly monitored and adhered to, if MSMEs are to have a chance of survival and growth.
On its part, the CBN should work out effective ways of ensuring that the N220 billion MSME loan scheme not only gets to the targeted public but also achieves the desired impact in the development of the economy.
It could do this by deploying specialized teams to monitor the effective use of the funds by all beneficiaries.