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 ten per cent respectively.
The CBN Governor, Mr Godwin Emefiele, had last week during a facility tour of the MFB said loans would be given at five per cent with a seven-year repayment period.
Speaking on the development, the Lead Director, CSJ, Mr Eze Onyekpere, said on Sunday that while the initiative was vital in view of its potential to provide liquidity to small businesses, the N5bn capital base of the MFB might be inadequate to bridge the funding gap.
He said, “This is a welcome development that will tackle the challenge of access to credit for SMEs.
“The implication is that the loans will be available at rates below the inflation rate and monetary policy rate.
“This to a great extent implies that the beneficiaries will be enjoying a subsidy.
“Access to credit has remained a huge challenge for Small and Medium Enterprises and monetary policy and money deposit banks over the years have shown no inclination at easing this challenge.
“However, for the foregoing benefits to materialise, this initiative needs to be taken to scale. The share capital of N5bn is paltry and will not scratch the surface of the needs in the sector. A minimum fund of not less than N100bn is required.”
He added, “The downside of this intervention is that the conventional Micro Finance Banks will stand no chance of competing with this special microfinance initiative.
“If it is taken to scale, it will crowd out their operations and they will be forced to wind up. But the positive benefits crowd out this downside.”
He said the initiative would increase value addition, create new jobs as small businesses would have access to credit to expand and deepen production.
Onyekpere said the establishment of the MFB would also create the opportunity of increased profitability.
“This will provide more taxable income to individuals and SMEs from which government’s revenue can be enhanced.
“Essentially, this initiative will reduce the unemployment figures, increase government’s revenue and boost productivity,” he added.