Source: Next.
Original article available online.
ABUJA, Nigeria, August 15 – More than a year after its launch, the ?50 billion (USD 315 million) microcredit development fund promoted by the Federal Government has not taken off. President Umaru Yar’Adua on February 12, 2008, launched the fund amid fanfare, with a promise that it would reduce the poverty level to below 20 percent by 2015.
A creation of the bankers’ committee, it was supposed to be administered by the Central Bank of Nigeria (CBN) in providing existing microfinance institutions (MFIs) with fund for credit creation and operational expenses. By dedicating one percent of their monthly allocations to the fund, states and local governments were equally expected to provide support. Their contributions were to be disbursed through micro finance institutions in their jurisdiction.
Dead on arrival?
Some operators say the project was dead on arrival as there was no existing framework for its operation before it was launched.
“The fund is only on paper, no micro finance bank has access to the fund,” said Ifeoma Ona, Managing Director, Elim Microfinance Bank Limited. “At every meeting we raise the issue with the CBN and they tell us that the fund is only on paper.”
She said unlike other countries where microfinance institutions get support from government due to their interventionist role in the economy, the Nigerian government has abandoned the microfinance banks to the harsh operating environment.
This was reaffirmed by other operators in the sector even as they blame the Federal Government for the tardiness associated with the take off of the fund.
“It is one thing to declare a policy and another thing to put the process in place,” said Godwin Ehigiamusoe, Executive Director, Lift Above Poverty Organisation (LAPO), a microfinance institution.
He acknowledged that the programme was a good idea by government and would help in the fight against poverty in the country.
But another operator said the absence of clear guidelines for operating the fund was responsible for its lack of operation.
“We hope that in a couple of weeks, the Central Bank would come up with clear guidelines on accessing the fund,” said Simeon Akinteye, Managing Director, Integrated Microfinance Bank Limited.
Assisting the active poor
Efforts to reach the CBN to speak on the current state of the fund was not successful as the mobile phone of Mr. Muammed Abdullahi, its Head of Corporate Affairs was not successful.
Financial services operators equally agree that micro financing remains a major only way to reduce poverty and develop the economy. Analysts at FSDH Securities Limited said that the CBN can use microfinance banks to increase access to credit among small and medium scale industries in Nigeria. In its half-year review of the Nigerian economy, FSDH identified the absence of a robust microfinance sector as having a toll on economic growth.
“In order to achieve this, the CBN needs to intensify its efforts in capacity building for the industry operators,” said the review.
To Mr. Akinteye, CBN can devote some portion of the fund to building capacity and confidence in the system. “Everybody must have confidence in the system before they can be willing to deposit money,” he said.
By Stanley Oronsaye, Next
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