CBN stirs controversy with reversal of SME funding policy

CBN stirs controversy with reversal of SME funding policy

A new controversy may be brewing within the financial circle as the Central Bank of Nigeria (CBN) has concluded plans to reverse the policy on funding of small and medium enterprises (SMEs).

With the new policy, the more than 40 million SMEs in the country will have to re-apply and register at the apex bank’s Development Finance Department before those which meet the condition will be considered for fund support.

In 2013, the federal government announced that it had set aside seed funds with which to support small scale enterprises, using the microfinance banks as medium for the funds disbursement.

It was learnt that the process was to make available, a minimum of N3 million to a qualified start up.

But officials of CBN said the instability noticed in the banking system had called for a review of the programme.

It would be recalled that in July 2017, a number of SMEs, publicly complained to the authorities that their applications for the support fund were dumped by the some of the banks.

This generated some controversy as operators of microfinance banks accused CBN of double standard, arguing that they were asked to process the SMEs’ forms while the money was with the commercial banks.

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They said less than five per cent of applicants have been able to access the funds, three years after takeoff.

An executive director with ABC Microfinance said the operators were merely being used as a medium to process forms for SMEs, as the money was not with them to disburse.

The CBN director, Development Finance Department, Dr. Mudashiru Olaitan, who confirmed the new development, said it is to ensure that a better financing method is adopted by government to sanitise the system.”

Another source said the failure of government to ensure that the empowerment scheme for the small scale enterprises is effectively followed up is an indication of lack of seriousness on the part of policy makers in engaging idle youths through self-employment.
By Emma Eke…

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