The Nation Newspaper

Tag: NERFUND

  • NERFUND: Govt may extend bidder exit date for interim managers

    NERFUND: Govt may extend bidder exit date for interim managers

    The Ministry of Finance (MoF) may extend October deadline for the Central Bank of Nigeria (CBN) and Nigeria Deposit Insurance Corporation (NDIC) to hands off the management of the National Economic Reconstruction Fund (NERFUND), The Nation has learnt.

    The extension is to enable the  interim management team complete NERFUND resuscitation.

    The team was seconded last October 14 to overhaul NERFUND following a N5.7 billion loss. Its tenure is expected to end on October 13.

    The team is headed by Muhammad Gidado Kollere of the NDIC as Managing Director/CEO; Ihua Elenwor of the CBN is the Executive Director, Operations.

    The managers are to recover outstanding loans and reconciliate all accounts with correspondent banks. They are also expected to render quarterly reports to NERFUND’s board, headed by the Permanent Secretary, MoF.

    An insider at NERFUND said the agency’s receivership is for one year, after which a substantive Managing Director will be appointed.

    The source said there is intense lobbying for the job.

    “You see, these managers from the CBN and NDIC may not want to quit when their tenure expires in October. They are more professional than the past managers of the Fund. They are also likely to seek extension of their tenure,” the source said.

    The source said the CBN/NDIC team has been able to restructure some of the ‘political loans’ that led the Fund into incurring losses. “Majority of the political loans that dented the balance sheet of the FUND has been restructured, and collateral secured,” the source said.

    The source also faulted the N5.7 billion loss claim by the government, saying the total amount NERFUND obtained from government since inception is not up to that amount. The Fund received N2.8 billion in 2010, and $141 million from the Africa Development Bank (AfDB) at an exchange rate of N9.9 to a dollar, in 1991.

    NERFUND also got another N350 million loan from the Federal Government. The source said the cumulative funds, made available to NERFUND till date, are below N4 billion.

    The source said there are also plans to restructure the operations of the Fund.

    This may necessitate the merger of NERFUND with the Bank of Industry (BoI) to deepen credit access to small and medium enterprises (SMEs).

    NERFUND was established by Decree No. 2 of 1989 to provide medium to long-term loans to participating banks (PBs) for on-lending to small medium enterprises (SMEs) for the promotion and acceleration of productive activities in such enterprises.

    The government took over the Fund following President Goodluck Jonathan’s approval of the recommendations of the CBN and NDIC Joint Special Examination report on its books. It claimed that the capital invested in the institution by the Ministry of Finance had been eroded with the gross losses.

    The Fund, it was learnt, has not been able to service loans taken for on-lending from the AfDB, the MoF and other sources. The source said the agency’s last governing board was dissolved in 1993, adding that it was being run by an Interim Management Committee headed by Permanent Secretary, MoF before the CBN/NDIC team came on board.

    The source said the firm has over time canvassed for reconstitution of its corporate governance board, recapitalisation and total restructuring. There were also previous plans to merge it with other Development Finance Institutions (DFIDs), which also failed.

    Conditions set for accessing the NERFUND Micro Enterprises Credit Scheme entail that prospecting businesses must be engaged in manufacturing, mining, quarrying, agro-allied, industrial support services, equipment leasing and other ancillary services.

    Besides, the enterprise should be wholly Nigerian owned and must source its raw materials for the project locally but could source plant and machinery either locally or from abroad. The projects to be financed must be financially and economically viable, and should have positive impact especially in employment creation in the operating environment.

    According to NERFUND statutes, the expected project could be a start-up, expansion, rehabilitation or diversification of existing business while the beneficiaries are expected to own 10 per cent equity of the proposed business. The prospective beneficiary must have a limited liability company or registered enterprise and can only access between N100,000 and N5 million.

  • Ondo faults delay in payment of NERFUND

    ONDO State government has lamented the delay in the release of the National Economic Reconstruction Fund(NERFUND) by the federal government.

    The Commissioner for Employment and Productivity, Ogundeji Iroju, disclosed this during a meeting with artisans in the state.

    He flayed the delay in the payment of the counterpart fund to the coffers of the state by the National Economic Reconstruction Fund to artisans.

    The commissioner said the government was doing all within its capacity to alleviate the unemployment problem in the state by providing jobs to the teeming youths.

    The 8, 000 youths given direct employment by the government, Iroju said, included those in the traffic section, waste management department and direct labour agency.

    He said the government would soon start the process of employment into the civil service to further give employment opportunities to the youths in the state.

    On the complaint that they were yet to benefit from the loans given to artisans in the state, Iroju said the first tranche of the fund was solely from the state government as the Federal government through NERFUND was yet to redeem its pledge.

    According to him: “We had appraised the ODSG/NERFUND loan programme and it was discovered that the MoU stipulated that a total sum of N1billion was to be disbursed as loan and both parties were to contribute at the ratio 4:6 in two batches.

    “Unfortunately Ondo State government contributed her own N200million in the first batch while NERFUND is yet to contribute its own part until now.”

    Iroju said all attempts to make the federal government agency fulfill its part of the deal has not sailed through.

  • CBN, NDIC to quit NERFUND in October

    CBN, NDIC to quit NERFUND in October

    • Team still working on ‘N5.7b loss’

    Acombined team of the Central Bank of Nigeria (CBN) and Nigeria Deposit Insurance Corporation (NDIC) officials managing the National Economic Reconstruction Fund (NERFUND) will quit in October, The Nation has learnt.

    The team was deployed in NERFUND on October 14, last year to revamp the agency following a N5.7 billion loss.

    The team appointed by the Ministry of Finance is headed by Muhammad Gidado Kollere of the NDIC as Managing Director/Chief Executive Officer. Mr Ihua Elenwor of the CBN is the Executive Director (Operations).

    It is involved in the recovery of outstanding loans, and reconciling all accounts with correspondent banks. It also renders quarterly report to the Board of the Fund, headed by the Permanent Secretary, Federal Ministry of Finance.

    An insider in NERFUND said the agency’s receivership is for one year, after which a substantive Managing Director will be appointed to replace the former one, Baba Maina Gimba, who left last year. The source said there was intense lobbying on who replaces Gimba. The new managing director, the source said, might not be an insider.

    The source also faulted the N5.7 billion loss, saying the total fund obtained by the body from government since inception was not up to N5.7 billion being declared as loss.

    The Fund received N2.8 billion in 2010, and $141 million from the Africa Development Bank (AfDB) at an exchange rate of N9.9 to a dollar, in 1991.

    NERFUND also got another N350 million loan from the Federal Government. The source said the cumulative funds, made available to NERFUND till date were below N4 billion.

    NERFUND was established by Decree No. 2 of 1989 to provide medium to long-term loans to participating banks (PBs) for on-lending to small and medium enterprises (SMEs) for the promotion and acceleration of productive activities in such enterprises.

    The government took over the Fund following President Goodluck Jonathan’s approval of the recommendations of the CBN and NDIC Joint Special Examination report on its books.

    It claimed that the capital invested in the institution by the Ministry of Finance had been eroded with the gross losses.

    The Fund, it was learnt, has not been able to service loans taken for on-lending from the AfDB, the Ministry of Finance and other sources.

    The source said the agency’s last governing board was dissolved in 1993, adding that it was being run by an Interim Management Committee headed by Permanent Secretary, Federal Ministry of Finance before the arrival of the new CBN/NDIC team.

     

     

     

    She said the firm has over time canvassed for reconstitution of its corporate governance board, recapitalisation and total restructuring. The spokesman said there were also previous plans to merge it with other Development Finance Institutions (DFIDs), which also failed.

    Conditions set for accessing the NERFUND Micro Enterprises Credit Scheme entails that prospecting businesses must be engaged in manufacturing, mining, quarrying, agro-allied, industrial support services, equipment leasing and other ancillary services.

    Besides, the enterprise should be wholly Nigerian owned and must source its raw materials for the project locally but could source plant and machinery either locally or from abroad. The projects to be financed must be financially and economically viable, and should have positive impact especially in employment creation in the operating environment.

    According to NERFUND statutes, the expected project could be a start-up, expansion, rehabilitation or diversification of existing business while the beneficiaries are expected to own 10 per cent equity of the proposed business. The prospective beneficiary must have a limited liability company or registered enterprise and can only access between N100,000 and N5 million.

    It further explained that the first step securing the loan is the identification of a bankable project, which is one that is technically feasible and commercially viable. Also, applications for funding are to be accompanied with a simple business plan attached with a pro forma invoice, stating the price and source of proposed plant and machinery.

     

  • CBN, NDIC takeover NERFUND over N5.7b loss

    CBN, NDIC takeover NERFUND over N5.7b loss

    The Central Bank of Nigeria (CBN) and the Nigeria Deposit Insurance Corporation (NDIC) have taken over the management of the National Economic Reconstruction Fund (NERFUND) after a N5.7 billion loss incurred by the firm.

    But a source claimed at the weekend that the fund obtained by the body was not up to N5.7 billion being declared as loss by the Federal Government.

    The source doubted the sincerity of the figure, saying NERFUND received N2.8 billion in 2010. It received $141 million from the Africa Development Bank (AfDB) in 1991 when the exchange rate for the naira was N9.9 to a dollar. NERFUND also got N350 million loan from the Federal Government.

    The source, who pleaded not to be quoted because he is not allowed to talk to the press, said the cumulative fund given NERFUND is below N4 billion, adding that the “government just wants to give a dog a bad name to hang it”.

    NERFUND was established by Decree No. 2 of 1989 to provide medium to long-term loans to Participating Banks (PBs) for on-lending to small and medium enterprises (SMEs) for the promotion and acceleration of productive activities in such enterprises.

    The erstwhile Managing Director of NERFUND, Baba Miana Gimba, once said that NERFUND had funded about 266 firms and that about 1,850 entrepreneurs benefit from NERFUND loan facilities across the Federation.

    To qualify for NERFUND funding, applicants must own a business of manufacturing (not Agriculture) and he/she must come up with a bankable project and a thorough feasibility report stating categorically the prospective nature of the business.

    With regards to interest rates, NERFUND is non-profit oriented though it charges “a small interest that is required which is about 13 per cent for small and medium business and this 13 per cent remains unchanged throughout the tenure of the loan. For micro credit, the interest rate is about eight per cent.

    Beneficiaries are expected to own 10 per cent of equity of proposed business. The prospective beneficiary must have a limited liability company or registered enterprises and can only access between N100,000 and N5million.

    Between 1989 and 2000, the Fund gave out over N3 billion to finance 266 projects, but between 2000 and 2010, there was a break in terms of credit facilities extended to businesses. It was resuscitated in late 2010 and between 2010 and February 2012, NERFUND said it gave out about N1.6 billion to micro entrepreneurs who needed between N1 million and N5 million each.

    President Goodluck Jonathan has approved the takeover of the management and control of the agency.

    A statement from the Permanent Secretary Ministry of Finance, Mrs. Daniella Nwaobia said “the decision to take over the management and control of the Fund followed the President’s approval of the recommendations of the CBN and the NDIC Joint Special Examination report on the books and affairs of the Fund.”

    Mrs. Nwaobia lamented that the capital invested in the institution by the Ministry of Finance had been completely eroded, with losses standing at N5.7 billion.

    The Fund, the report added, had not been able to service loans taken for on-lending from the African Development Bank (AfDB), the Ministry of Finance and other sources.

    The new management team appointed by the Ministry of Finance is headed by Mr. Muhammad Gidado Kollere of the NDIC as Managing Director/CEO and Mr. Ihua Elenwor of the CBN as Executive Director (Operations).

    The team is to oversee the affairs of the institution for an initial period of one year. It has been mandated to, among other things, mount an aggressive recovery of all outstanding loans, overhaul the Fund’s records, reconcile all accounts with correspondent banks and render quarterly reports to the Board of the Fund, headed by the Permanent Secretary, Federal Ministry of Finance.

  • NERFUND to create 500,000 jobs in 2013

    Half a million jobs are on the way for Nigerians in the new year courtesy of the National Economic Reconstruction Fund (NERFUND).

    Head, Corporate Affairs of the company, Mr. Dahiru Ali, said yesterday in Abuja that the jobs would be generated through 30,000 projects to be established by entrepreneurs funded by the NERFUND.

    The projects are estimated to cost N150 billion.

    Last year, according to him, “the fund was able to approve 1,612 micro and small industrial project loans valued at N5.2billion.”

    Of this number, 1,071 micro enterprises with funding limit not exceeding N500million have been fully disbursed to the tune of N2.34 billion.

    He said: “NERFUND has a track record of optimum performance in loan recovery. For instance, out of the 266 projects funded between 1989 and 1999, 244 fully liquidated their liabilities, amounting to N4.97billion.”