By Bukola Adetoye
A banker, Mrs Olubummi Lawson, has appealed to Development Bank of Nigeria (DBN) to give priority to microfinance banks in the disbursement of the 1.3 billion dollars earmarked for Micro, Small and Medium Enterprises (MSMEs).
Lawson, the Chief Executive of Accion Microfinance Bank, made the appeal while speaking with the News Agency of Nigeria (NAN) on Wednesday in Lagos.
Lawson said that although the bank was set up to cater for all MSMEs, but microfinance banks (MFBs) needed more attention because of the peculiarity of the sub-sector.
She said the call became imperative because the active poor needed to get funds for their small businesses to ensure inclusive growth.
According to her, the sector has almost gone into extinction because of the inability of most microfinance banks to lend to the active poor at single digit rates.
“In the past, the sector was able to do that, but now it is difficult because most microfinance banks secure funds from commercial banks.
“Commercial banks lend at between 25 and 28 per cent interest rate and it is difficult to secure such a loan at such a high rate and give it out to the active poor at a single digit rate,” she said.
Lawson said that if more priority was given to microfinance banks, the cost of loans to small-scale businesses would reduce.
She said that only few MFBs, which were able to secure funds from the Central Bank and Bank of Industry, were lending at low interest rates to small businesses.
She said that many small businesses could not survive with high interest rates, adding that the demise of many of these businesses contributed to the current economic situation in the country.
Lawson said that lower interest rates would quicken loan repayment by the active poor and hasten the opportunity for capital improvement.
NAN reports that DBN is a wholesale financial institution which got its licence in March.
The bank got 1.3 billion dollars as seed capital from the CBN for on-lending to MSMEs through eligible financial intermediaries.
The 1.3 billion dollars was originally provided by the World Bank, German Development Bank, the African Development Bank (AfDB) and the Agence Française de Development (French Development Agency)