Monday, 26 October 2015

N220b CBN MSME Fund - How Governors are frustrating disbursement of funds to beneficiaries

MORE than two years after the Central Bank of Nigeria (CBN) launched a N220 billion Micro, Small Medium Enterprises (MSME) Fund with fanfare, refusal by the bank authorities to provide progress report on the scheme and state governors’ defaulting on agreements have cast uncertainty over its disbursement.

While The Guardian’s effort to obtain information on the impact and status of the fund and its beneficiaries were rebuffed by CBN officials, it was learnt that, by defaulting on counterpart funding agreements, some state governors frustrated efforts to provide seed capital and support to micro entrepreneurs and SMEs in their domain. Continue......

Under immediate past governor, Mallam Sanusi Lamido Sanusi, the CBN launched the fund on August 15, 2013 with a share capital of N220 billion. Eleven months later, under the leadership of Mr. Godwin Emefiele, specifically, on July 27, last year, the bank signed a Memorandum of Understanding (MoU) with 14 states for the fund’s disbursement.

However, to date, little is known of the scheme’s impact or how much has actually been disbursed to banks for onward release to small businesses in an exercise that is envisaged to radically transform the industrial sector in benefiting states. Also, there is still the question of the performance of loans attached to the funding arrangement.

Sources within and outside the apex bank assert that the intervention scheme may have been frustrated by state governors, who are sureties of the fund for their respective states, but are prevented from having control or access over disbursements, which is in line with the funding framework. This is to ensure that payments are made directly to entrepreneurs and kept out of the reach of governors. The role of the governors, however, is to get state assemblies’ approval, as well as, sign an irrevocable standing payment instruction (ISPO) to guarantee the repayment of the facility on behalf of their beneficiaries.

Read more on Guardian

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