Reps decry CBN’s high interest on SMEs fund

The House of Representatives, yesterday, decried the 9 percent lending rate fixed by the Central Bank of Nigeria (CBN) for small and medium enterprises (SMEs) through on the 220 intervention fund.

Daily Trust reports that the CBN at its 7th Micro, Small and Medium Enterprises (MSMEs) Finance Conference held in Abuja recently, announced that N220 billion was set aside for micro-finance banks to borrow at 9 percent interest rate and lend to SMEs.

But the House said the rate “seems rather high, considering the group of people the fund is meant for, who are mainly artisans, small farmers engaged in subsistence farming and small scale business owners.”

The lawmakers expressed their concern that “despite the fact that micro-finance banks are currently charging between 30 and 40 percent as interest, the CBN has granted them powers to fix the rate of interest when they lend to industrialists, a situation that, if not properly monitored, may be abused and defeat the aim of the scheme.”

The lower chamber of the National Assembly consequently mandated its committee on banking and currency to liaise with the CBN to ensure adequate monitoring of the N220 billion for micro-finance banks across the country.

This followed the adoption of a motion on the matter moved by Rep Patrick Ikhariale (PDP, Edo).

The House also urged the CBN “to closely and carefully monitor the implementation of the scheme in order to prevent corrupt practices by bank owners or their privies who may appropriate funds.”

It further directed the apex bank to liaise with the relevant associations of micro-finance banks in the disbursement of the funds, saying efforts should be made for easy accessibility of the funds by intended beneficiary, including the 60 percent reserved for women, at minimal interest rate.