CBN Eyes MfBs in 774 LGs For Cheap Finance

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BY EDMOND ODOK, ABUJA – The Central Bank of Nigeria (CBN) says establishing functional Microfinance Banks (MfBs) in Nigeria’s 774 Local Government Councils will deepen financial inclusion and guarantee access to cheap finance by small businesses.

According to the apex bank, its focus is to ensure small enterprises and unbanked people can easily access credit for economic growth and development in the country.

The CBN Governor, Mr Godwin Emefiele, admitted that the biggest challenge facing small businesses is lack of access to credit; but expressed the hope that having at least one viable MfB in each of Nigeria’s 774 local government Councils would promote institutions that deepen financial inclusion and ensure easy access to credit at the grassroots level.

Speaking during facility tour of Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) MfB in Gwagwalada, Abuja on Wednesday, Mr Emefiele said the initiative, a collaboration involving the Bankers Committee, NIRSAL and Nigerian Postal Service (NIPOST), will have seven MfBs set-up in the six geo-political zones and the Federal Capital Territory (FCT).

According to the CBN governor, these seven branches will be cited in Ibadan, Bauchi, Port Harcourt, Enugu, Lokoja, Kaduna and the one already established in Gwagwalada Area Council, FCT.

NIRSAL MfB is an agro-business initiative that provides risk for practicing farmers and Mr Emefiele said its initial capital base is N5 billion with a proposal for 50 operational MfBs in the second phase of the launch.

“We are just inspecting one out of the first seven and we are scaling up to the next 50 in the next phase. We believe that before the end of this year, we would have moved substantially in making sure that they are set up and be able to provide finance to small businesses”, he said.

The CBN Governor, who acknowledged that the small and unbanked people ‘are the very weak’ of society, said creating NIRSAL MfBs across the country would aid the process of improving access to credit and deployment of financial technology (FinTech) to enhance financial inclusion and access to cheap funds by individuals and small businesses at the grassroots.

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