CBN expects new micro finance fund to hit N100 Billion in 2010
Image credit to Vanguard
The Central Bank (CBN) has said it expects the new Micro Credit Fund (MCF) to increase to N100 billion in two years. The MCF replaces the Small and Medium Industries Equity Investment Scheme (SMIEIS) designed to direct the flow of bank funds to small and medium-scale enterprises.
ImageThe fund which began operation with the N37.5 billion SMIEIS fund, has a micro credit component which supports activities of small and micro enterprises through interventions of government at all levels.
It also involves activities of the micro finance banks in providing cheap finance to the small and micro entrepreneurs.The Guidelines on the MCF stated that MCF would serve as an interim scheme for only three years.
It said the scheme would be phased out as soon as legal and institutional infrastructure for effective administration of credit to small and micro enterprises improved.
“In the first instance, this programme shall be applicable for three years, 2008, 2009 and 2010.“The tenor of the loan accessed by each state shall be as agreed with the bank but shall not exceed one year in the first instance, with the possibility of a roll-over yearly, thereafter,” the guidelines said.
The CBN said for a state to access the fund, it had to deposit a counterpart fund from the bank from which it is obtaining the fund.
It must also set up a monitoring mechanism to ensure efficient utilisation of the fund as well as to sign an irrevocable Standing Payment Order (ISPO) in favour of participating bank.It said a state could access the fund on a yearly basis provided it met its obligations under the fund.
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