CBN-backed microfinance bank to give loans at 5% interest rate

March 07

09:28 2019

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Godwin Emefiele, governor of the Central Bank of Nigeria, says the new NIRSAL microfinance bank will give out loans at a five percent interest rate.

Speaking on Wednesday after touring a model of the proposed microfinance bank, Emefiele said the was developed to increase access to credit for small and medium scale enterprises.

Customers will have a two-year moratorium and five years for repayment.

The microfinance bank, which is a brainchild of the Bankers’ Committee, Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) and the Nigerian Postal Service (NIPOST), has set up with an initial capital base of N5 billion.

The Bankers’ Committee holds 50% stake of the bank; having provided the setup capital, while NIRSAL and NIPOST own 40% and 10% respectively.

According to Emefiele, plans are in the works to ensure that the microfinance bank is set up in all 774 local government areas of the country.

“The existing microfinance institutions are doing their best and I must say that I have heard some of them say that this is an attempt to crowd them out,” the CBN governor said.

“It is not an attempt to crowd them out but it is also an attempt to complement their services and also see to it that whatever services that are being provided by these microfinance institutions which are in their own right also banks- that they should be seen to be fair to their customers.

“We know that those who are weak in terms of being unable to access credit- the big issue for them is also the inability to provide collateral. So what are we saying here? They will be able to access credit without necessarily providing any collateral.

“The asset that we are financing for them, like the poultry business will act as the collateral – that collateral will be registered in the National Collateral Registry as something that is eligible to serve as collateral or security for a loan that has been taken.”

At present, there are seven branches of the microfinance bank with plans to expand to 50 branches before the end of 2019.