The International Finance Corporation (IFC) is collabo-rating with the Central Bank of Nigeria (CBN) to establish a National Collateral Registry (NCR), IFC’s Project Manager, Ubong Awah, has said.
Speaking on the sideline at a workshop on the N220 billion MSME Fund organised by the Bankers’ Committee’s sub-committee on Economic Development, Sustainability & Gender in collaboration with the CBN, Awah said when established, the Registry would help in stabilising micro, small and medium enterprises (MSME) financing and also boost the confidence of local banks in playing active roles in financing the sector. The establishment of the Registry will also assist in minimising the risks associated with MSME financing.
According to Awah, the MSME sector is an important catalyst for economic growth; therefore, financing the sector requires serious attention.
He said: “As an organisation, IFC is bringing the experience we have garnered over the years across geographies to bridge the knowledge gaps and lay emphasis on the fact that globally, collateral for MSME is moving away from fixed assets to movable assets; hence, the need to establish a collateral registry for the financial industry. We are excited to partner with the CBN on this initiative.’’
According to the apex bank, MSMEs are the engine room for economic growth, vehicle for job creation, tools for poverty alleviation and wealth creation for any country’s economy. The Director, Development Finance Department of the CBN, Dr. Mudashiru Olaitan represented by the Assistant Director, MSME Development Fund, Mr. Tobin Jonathan, said the workshop was organised to cross-fertilise ideas and bridge the knowledge about the MSME sector by the lending institution and to also correct the wrong perception of the risky nature of the sector.
Jonathan further explained that the rejection rate of MSME application by commercial banks is very high, which he said is due to commercial banks’ aversion to risk from MSMEs operators. These risks he noted to include lack of entrepreneurial skills and poor governance structure of most MSMEs; hence, the need for the workshop to enlighten bankers and encourage them more on the need to partner with the CBN on the need to grow the MSME sector.
In similar vein, the Assistant Director, Development Finance department of the apex bank, Mrs. Amina Umar, said since the N220 billion MSME intervention fund was launched in 2014, the uptake by the Deposit Money Banks had not been encouraging. “There is then the need to interact with SME officers of banks to understand the banks’ challenges in MSME financing,” she said.
Umar said it is the hope of the CBN that with the workshop, more than 50 per cent of the fund would have been accessed by the end of 2015 in compliance with the target set by the Bankers’ Committee and driven by the Economic Development, Sustainability and Gender chaired by the managing director, Standard Chartered Bank, Mrs. Bola Adesola.
She said that the deliberations and various presentations at the workshop would now help to increase awareness about the intervention fund, build capacity within the sector, develop innovative MSME financing products and also take advantage of the over 17 million MSMEs within the sector. Other Speakers at the workshop included, Mr. Peter Bamkole, Director, Enterprise Development Centre, Pan Atlantic University, Dr. Kamakhya Singh, CFO, Lapo MicroFinance and Ms. Olabisi Talabi, Entrepreneur and CEO, Centre of Hospitality Studies.
It would be recalled that that the N220 billion MSME intervention fund was launched by President Goodluck Jonathan in August 2014 to stimulate growth in the sector as a means of strengthening the link between the entrepreneurs and access to financial services.
