Is CBN doing enough?

The Governor, Central Bank of Nigeria, Mr. Godwin Emefiele, on Thursday said banks in the country were not doing enough to encourage lending to Small and Medium Enterprises in the country.

Emefiele said this at in Lagos during the opening ceremony of the seventh Annual Bankers’ Committee Retreat.

He said, “We are entering a phase where we believe that the SMEs must be the only priority for growth in our economy. I must say that the Nigerian banking sector has not played an active part in supporting the SMEs, but this is not without reasons. We had issues in the past where people took loans and didn’t pay.

“The SMEs are seen as drivers of growth in any economy. Nigeria has 37 MSMEs. The CBN has a N220bn MSME facility. We have used various approaches to stimulate lending to the SMEs through that fund and I must confess that we are not doing enough on that because less than half of that fund has been disbursed today.”

The CBN governor announced that a low-interest loan scheme for one million young graduates would commence next year as part of the strategy of the Federal government to boost the Micro, Small and Medium Enterprises sub-sector and curtail unemployment among the youth.

According to him, the fund will be managed by the central bank in collaboration with commercial banks.

He said, “We need to get more and more people to be employed, and we will need the support of the banks to begin to see how we lower our risk acceptance criteria to give support to our young graduates.

“In the course of the next few weeks, we will be unfolding a plan of support of the CBN to create employment for at least one million young graduates in Nigeria in 2016. That will entail support from Nigerian banks and our development institutions to see how we will channel these concessionary loans to companies that are MSMEs.”

Emefiele said the plunge in commodity prices, especially crude oil, had led to sharp fall in the nation’s revenue, adding that Nigeria and other oil exporting countries were facing hard times, a situation that necessitated the need to diversify the economy away from oil.

According to the CBN boss, the MSMEs represent the engine room of growth of any economy and there is a need for Nigeria to focus on the sector in order to weather the trying times.

He said, “The drop in commodity prices is a major thing that has affected the country. What that means is that your revenue has dropped and we are facing very serious pressure on our external reserves and exchange rate.

“What that does is that we all need to think about how we should come together and see what we can do as a people to shield ourselves from what is happening. So, we need to do whatever we can to protect the economy.”

Emefiele urged the bank MDs and heads of financial institutions at the meeting not to shy away from lending to the real sector, adding that the proposed loan scheme for young graduates must work.

He said, “Let’s give the young graduates a chance. The SME programme is going to be separate from the N220bn MSME fund, and I am saying if you (the banks) refuse to support, your money that we would have released through the Cash Reserve Ratio, we will take that money and lend it through any channel that will give these young graduates jobs.

“We all need to think together and agree because there is no need to release the money to you and all you do with the money is buy treasury bills. It can’t continue. We need to think about the best ways to diversify this economy away from oil.”

Meanwhile, the Minister of Finance, Mrs. Kemi Adeosun, who was also present at the opening of the retreat, disclosed that the Federal Government would be borrowing to stimulate the economy.

She said Nigeria was facing a very challenging economic situation and there was a need to focus on the SME sector to boost growth.

According to her, the government will be doing all that needs to be done on the fiscal side of the economy to ensure that the money that will be borrowed is not spent on recurrent expenditure but on capital projects.

http://www.punchng.com/cbn-plans-soft-loans-for-one-million-graduates/ lalasticlala, dominique

After you and your employer has transferred the funds they leverage on to do little ab initio.
Need we tell you that there is so much uncertainty in the business environment, and the economy in general. The earlier you advise your dull president on the way forward for the persistent fall in naira value, the better for our SMEs.

I wonder why he is lamenting. Afterall he is the governor of CBN, he is in the best position to change that.

Banks would only provide funds for oil related businesses , cos that guarantees the profitability of such ventures.

And of course, interest rates are astronomically high.

No SME can afford such rates on loans.

Is it their fault?

Most SMEs are in their start up stage. And the risk of start ups failing is very very high.

Who go bear the risk of bad loans?

No be the bank?

If the bank bears the risk of bad loans with their capital, won't it affect tgeir balance sheets?

Thanks to Baba Bubu and TSA, now most banks are going into strictly Retail banking to source for funds.

I won't Blame them.

Ol

Ok

hmmm

This dastardly policy on cash limit usage is affecting small businesses.
CBN should first of all review it.
The limit is too small for those transacting legitimate business.
People are been forced to open several bank accounts to utilize payments.

dominique:
I wonder why he is lamenting. Afterall he is the governor of CBN, he is in the best position to change that.

Lets the bygones be bygones....this new administration should be the change we want to see.... Is traveling part of corruption??

r

Since charles soludo and sanusi sanusi, cbn has not had any governor

This is why i hate Nigeria, as head of zenith bank did u help them Mr green tie u know wat gerahere mehn

Very true. We know that already.


Emefiele please I need the modalities on how to be part of the loan next year. I will inbox my details to you for more info. Thanks in advance.

Thank goodness he's best positioned to address this. If he has any kind of reservations against it then let him do something about it ASAP. It shouldn't just stop at complaining to the world.


Please check my signature for your building POP ceiling etc

dominique:
I wonder why he is lamenting. Afterall he is the governor of CBN, he is in the best position to change that.

Don't mind him. To what extent has CBN de-risked lending to specific sectors of the economy?

When non-performing loans (NPLs) balloon, who bears the brunt? Who carries the "hammer"?

ednut1:
...as head of zenith bank did u help them Mr green tie u know wat gerahere mehn

One bottle of chilled Orijin for you bro...

englishmart:
the stanbic ibtc i know is better than the cbn i don't know

StanbicIBTC has been my bank and I don't regret it. Although I heard the rate now is 35%.

SMEs r surely d only hope this our country can use to attain the developmental level we r all so yearning for but unfortunately there is no proper framework to help spur the development of the SMEs. I think the govt should just make them a priority by not just formulating good policies but by giving them supports. We can't blame d banks, for they're in business to make profit too neither should we blame d SMEs or d govt. Its about time we stop d blame game and all hands b on desk cos a viable SMEs sector is all nija needs to become d next China.

this is typical of our leaders who are position to make positive impact rather they apportion blames up and down

No.

noted

So what's the way forward?

Support SME at your own peril. I remember when on of the Nigerian banks tried it with their SME QUICK Loan. Many SMEs took the loan and disappeared. Smh

IamMissMarvel:
Is it their fault?

Most SMEs are in their start up stage. And the risk of start ups failing is very very high.

Who go bear the risk of bad loans?

No be the bank?

If the bank bears the risk of bad loans with their capital, won't it affect tgeir balance sheets?

Thanks to Baba Bubu and TSA, now most banks are going into strictly Retail banking to source for funds.

I won't Blame them.

What the SMEs who are in their early stages need is not loan but grants/aids and a waiver from paying tax for a certain period of time (say within the first 5 years) to enable them stabilize and flourish.