MFBs looking forward to CBN’s low interest fund 
One year after the non- implementation of the first pronouncement to set up microfinance development fund for microfinance banks in the country, the Central Bank of Nigeria (CBN) has again made a watery offer to support the sub-sector financially this year.
This has again raised the hope of operators of microfinance banks as they look forward to accessing the fund. The implication is that if the CBN sets up the fund, microfinance banks will be able access the fund at a reduced interest rate and be able also to disburse to their customers at low interest rate.
The CBN at the sixth Annual Microfinance Conference and Entrepreneurship awards held recently in Abuja said the microfinance development fund would be established in 2012 and will include both commercial and social components that will enhance its operations and outreach. The fund will also aim at improving access to affordable and sustainable sources of finance by microfinance institutions and microfinance banks.
The question is, having failed in implementing its pronouncement last year; will the CBN do so this year?
While some operators believe that the CBN will establish the fund this year as promised, others do not. Sunny Akhamiokhor, managing director of Support Microfinance Bank Limited, said since the CBN has not given any microfinance bank any money from the N54 billion in micro credit fund, it will not set up the microfinance development fund.
Olufemi Babajide, chairman, National Association of Microfinance Banks (NAMB) Lagos chapter, believes that the CBN will fulfill its promise this time aroubd, adding that it concentrated on capacity building of microfinance banks last year.
He affirmed that the CBN has promised to give commercial support to microfinance banks to enable them have access to fund at a reduced interest rate.
In 2011, at the 5th Annual Conference and Entrepreneurship Awards held in Abuja, the Federal Government pledged to support the CBN in setting up Microfinance Development Fund (MDF) that would boost access to credit for small businesses and in turn drive economic growth.
President Goodluck Jonathan said at the conference that the fund would accelerate the nation’s real Gross Domestic Product (GDP) growth, register increased investment, revive and grow the agricultural sector, create additional employment opportunities and particularly reduce the rising poverty rate in the country.
Incidentally, the same conference for this year will be held February, one year after the announcement was made.
BusinessDay gathered that liquidity problem has bedeviled the sub-sector overtime, which the pronounced establishment of MDF would have taken care of.
When this pronouncement was made, expectations of operators was that implementation of the fund would enable them access cheap funds for on lending to the poor but economically active people.
Now, could it mean that their hope for the fund has been forever dashed or that the Federal Government will fulfill its promise come next month at the upcoming conference, rekindling their hope?
At the time of the pronouncement, Lanre Abiola, chairman of Gold Microfinance Bank Limited, Lagos, said the Federal Government’s pronouncement is a good development because it will help in solving the liquidity problem in the sub-sector and increase client base. He said majority of microfinance banks are suffering from liquidity problems.
“This means more money, more business. The MDF will make sure microfinance banks have enough funds to serve their clients and there will not be collapse of the sub-sector,” Abiola said.
