The Central Bank of Nigeria (CBN) has announced plans to launch a Micro-finance development fund, which it expects to enhance availability of funds in the Microfinance sub-sector and boost the economy.
According to reports, the fund will come on stream before the end of the second quarter. Femi Fabanwo Director, Other Financial Institutions Department of the CBN said the operational guidelines for the fund were being finalised and would be presented to the apex bank’s management soon, for approval. The fund is expected to be co-funded by government, the CBN, as well as the private sector.
The CBN had earlier announced plans geared towards setting up a fund to improve access to affordable and sustainable finance by microfinance institutions and microfinance banks. At the apex bank’s sixth Annual Microfinance Conference and Entrepreneurship Awards, held in January, the promise was also reiterated, raising concerns among operators of microfinance institutions who have been hoping to draw on the fund to expand their businesses.
Fabanwo said the apex bank was carefully drafting the guidelines to ensure that the fund. He confirmed that the fund would have several windows, including commercial and social components, in order to enhance its operations and outreach and that it would also support capacity building activities of the MFBs and MFIs.
According to him, the fund’s operational guidelines would be benchmarked against global practices which would mean that the international community, especially the multilateral agencies may be invited to make input to the document.
Announcing the proposed fund last year, CBN governor, Sanusi Lamido Sanusi had explained that the apex bank was working on deepening the financial markets through the introduction of new products and appropriate control structures.
He also noted that the MDF when established would assist in addressing perennial challenges of underfunding for microfinance institutions.
According to Sanusi, such measures would complement past and current efforts aimed at strengthening the microfinance sub-sector of the financial system, improve financial inclusion and by implication, improve the nation’s Gross Domestic Product (GDP) rate significantly.
Source: Businessday
