MICROCAPITAL BRIEF: Central Bank of Nigeria Launches $1.3b Micro, Small and Medium Enterprises Development Fund

The Central Bank of Nigeria (CBN), the country’s central banking authority, reportedly has launched a NGN 220 billion (USD 1.3 billion) Micro, Small and Medium Enterprises (MSME) Development Fund, which is intended to offer loans to microfinance institutions (MFIs) at an interest rate of 9 percent or less per year [1].The fund is intended to reduce lenders’ costs based on the idea that this will lower the interest rates charged to clients. It is reported that in Nigeria, commercial banks charge an average interest rate of 21 percent to their clients, while microfinance banks are mandated to charge no more than 40 percent [1].

CBN Governor Sanusi Lamido Sanusi reportedly stated that the fund will also include an “interest rebate component” for women business owners who borrow from microfinance banks. This is intended in to reduce their retail rates to no more than 9 percent. Mr Sanusi also adds that the fund will include “a merit-based, incentive-based system [through which MFIs can seek]… to get even better credit terms from the fund. [1]”

The fund was originally scheduled to be launched in June of 2012, as MicroCapital reported at the time. Information regarding why the roll-out of the fund was delayed is not available.

As of November 2012, CBN reported total assets of NGN 13.3 trillion (USD 82.4 billion).

By Anesa Kratovac, Research Associate

About the Central Bank of Nigeria (CBN)

The Central Bank of Nigeria (CBN) was established in 1958 as Nigeria’s central banking authority. As defined by the act of parliament that created CBN, its statutory mandates are as follows: “to issue legal tender currency; to maintain external reserves; to safeguard the international value of the legal tender currency; to promote monetary stability and a sound financial system in Nigeria; and to act as banker and financial adviser to the Federal Government.” As of November 2012, CBN reports total assets of NGN 13.3 trillion (USD 82.4 billion).

Additional Sources and Resources:

[1] Leadership News Online, “CBN Launches N220b MSME Fund, To Disburse At 9%,” http://leadership.ng/news/160813/cbn-launches-n220b-msme-fund-disburse-9

MicroCapital.org Article, August 12, 2012, “MICROCAPITAL BRIEF: Microfinance Development Fund of Nigeria Will Seek to Increase Women’s Access to Financial Services by 15% per Annum,” https://www.microcapital.org/microcapital-brief-microfinance-development-fund-of-nigeria-will-seek-to-increase-womens-access-to-financial-services-by-15-per-annum/

MicroCapital.org Article, May 28, 2012, “MICROCAPITAL BRIEF: Central Bank of Nigeria (CBN) Financial Inclusion Strategy Includes Goal of 63m Savings Accounts by 2020,” https://www.microcapital.org/microcapital-brief-central-bank-of-nigeria-cbn-financial-inclusion-strategy-includes-goal-of-63m-savings-accounts-by-2020/

MicroCapital.org Article, May 18, 2012, “MICROCAPITAL BRIEF: Central Bank of Nigeria (CBN): MSME Development Fund Not for Bailing out Microfinance Banks,” https://www.microcapital.org/microcapital-brief-central-bank-of-nigeria-cbn-msme-development-fund-not-for-bailing-out-microfinance-banks/

MicroCapital.org Article, April 1, 2012, “MICROCAPITAL BRIEF: Central Bank of Nigeria to Endorse Microfinance Development Fund, More Automated Teller Machines (ATMs), Regulation Related to Electronic Statements, Dispute Resolution,” https://www.microcapital.org/microcapital-brief-central-bank-of-nigeria-to-endorse-microfinance-development-fund-more-automated-teller-machines-atms-regulation-related-to-electronic-statements-dispute-resolution/

MicroCapital Universe Profile: Central Bank of Nigeria (CBN), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Central+Bank+of+Nigeria+%28CBN%29

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