The newly-established NIRSAL Microfinance Bank would provide loans to small businesses at a single-digit interest rate of five per cent according to the Central Bank of Nigeria Governor, Mr Godwin Emefiele.

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He disclosed this during an inspection of the bank’s facilities located in Gwagwalada, Abuja.

The other pilot locations for the NMFB are Bauchi, Ibadan, Kaduna, Enugu, Port Harcourt and Lokoja Nigerian Postal Service offices.

The NMFB is a brainchild of the Bankers’ Committee, the Nigeria Incentive-Based Risk Sharing System and the Nigerian Postal Service.

The Bankers Committee provided the set-up equity capital and owns 50 per cent of the bank, while NIRSAL and NIPOST own 40 per cent and 10 per cent, respectively.

NIRSAL was created by the CBN to stimulate the flow of affordable finance and investments into the agricultural sector by de-risking the agribusiness finance value chain.

Speaking to journalists shortly after the facility tour, the CBN governor stated that the new MFB was expected to expand available options and empower small businesses across Nigeria.

He said the target was to have 774 branches in all the local governments in the country, adding that so far, seven had been established with another 50 branches being planned in the next phase.

The governor said the establishment of the NMFB with a capital base of N5bn would help to deepen financial inclusion as well as enable the CBN to achieve its 80 per cent financial inclusion target by next year.

He said the loans would be given out of the Agribusiness/Small and Medium Enterprises Investment fund at five per cent interest rate with a repayment period of seven years and a two-year moratorium.

On the issue of collateral, Emefiele said the loans could be given without the standard collateral requirements.

He said “We know that those who are weak in terms of those who are unable to access credit, the big issue for them is their inability to provide collateral. “

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The fund was set up by the Bankers Committee at the 331st meeting held on February 9, 2017, to improve access to affordable financing for Micro, Small and Medium Enterprises, particularly those operating in the informal sector of the economy.

As a commitment to the successful implementation of the scheme, all Deposit Money Banks, had voluntarily agreed to set aside and contribute five per cent of their profit after-tax annually to finance eligible projects under the scheme.

Emefiele said, “The biggest problem that small businesses always have is access to credit and  I am happy that with the establishment of this microfinance bank, which will be in at least one local government and we are talking about the 774 locations across the country.

“We will be able to have a financial institution that will help to deepen financial inclusion to make it easy for people to access credit, particularly the small and unbanked people, because we have always said that these are the very weak.

“We will use this to improve access to credit. Interest rate for this will be at five per cent and the loan will be for a tenure of seven years with two years moratorium.”