• Follow Facebook
  • Follow on Twitter
  • Follow on YouTube
Saturday, 17th February, 2018
 Nigeria   ::   News
Expert Concerned that SMEs, Microfinance are not represented on NBC board
Apr 04, 2017
By: Akinola Ifeoluwa

The Managing Director, Fortis Microfinance Bank (MFB), Mr Tiko Okoye expressed concern over the members on the board of the the Development Bank of Nigeria (DBN), as it has no SME or MicroFinance representatives but rather from the commercial banks and other financial organisations.

Okoye expressed this concern during an interview on Tuesday in Abuja  that this was worrisome because there ought to be people on the board who were concern first about the social mission of the bank rather than profitability.

He said that representatives from Association of Small and medium enterprises or National Association of Microfinance banks should have constituted part of the board.

“Notwithstanding, my advice to Okpanachi and his team, is to establish an SME credit guarantee scheme to de-risk the sector.

“They should also promote the creation of industrial clusters and provide them with government support, the right infrastructure and funding at affordable prices.

“When doing a wholesale lending, he should first look at the lending methodology of the MFBs. We have a preponderance of debt capital in this sector. The only thing that works effectively is the group lending methodology.

“DBN should also set up business incubation centers for capacity building, to reduce failure rate of the project.

“There are policy aspects that DBN and SMEDAN should look at for this to work and improve the success rate of whatever they are doing,” he said.

He said there was need for the Federal Government to create incentives like tax rebate, tax holidays to improve the success rate of Microfinance banks in the country.

Okoye  said that the reason for this, was the source of most MFB funding, which was mostly from commercial banks, because few MFBs were currently able to access funding  from Central Bank of Nigeria and Bank of Industry.

He said that a lower interest rate, would give businesses the opportunity to make capital improvements, and acquire equipment or supplies to grow.

He urged the DBN to priotise funding the MFBs rather than commercial banks if it indeed wants to improve  the MSMEs.

He cocluded that although MFBs take the risk to lend to low-end small scale businesses, the lending rate remains too high at between 25 to 100 per cent.



  Headlines (Nigeria):
Read our other news items below...