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F G Freezes N220bn MSME Loan Scheme – SMEDAN

SMEDAN has frozen the N220 billion Micro, Small and Medium Enterprises (MSME) Development Fund, pointing at unsatisfactory backup collaterals advanced by the borrowers.

Sunny Obidigbo, With agency reports

The Small and Medium Enterprises Development Agency (SMEDAN) disclosed that the disbursement of the N220 Micro, Small and Medium Enterprises (MSMEs) Development Fund has been put on hold by government due to lack of collaterals from the SME operators seeking access to the money.

According to SMEDAN, the Central Bank of Nigeria (CBN) and microfinance banks have stopped the disbursement of the loans following logistics impediments.

Lagos State Coordinator, SMEDAN, Mr. Yinka Fisher, said in Lagos that some of the SME cooperative members have been nursing the belief that the fund would be offered free, adding that applications came without the necessary documents for collaterals .

Mr. Fisher said that the misconceptions and the absence collaterals had resulted in serious conflict between the SME cooperatives, entrepreneurs, banks and the regulatory agencies like SMEDAN.

“The truth is that the disbursement of the fund has been placed on hold for now because most of the SMEs do not have presentable collateral and certificates of incorporation. The microfinance banks are complaining that they already have collateral with the Central Bank, but the SMEs approaching them for the loans are coming with un-presentable collaterals. So with this, it is difficult for the microfinance banks to keep giving out the loans.

“We are currently on reconciling terms with the CBN to figure out other means, but another major issue is that some of the SME owners are getting poor orientation about the loans,” Fisher said.

Mr. Fisher also said that SMEDAN had been working closely with Fidelity Bank and Infinity Microfinance Bank, to generate more loans for the SMEs. He said that the agency had been offering technical assistance, including proposal writing and accounts, to some of the SMEs who have been applying for the loans from the banks.

It would be recalled that the CBN earlier announced that part of the fund which was pooled for credit provision for SMEs has been disbursed so far to the target MSME operators.

The apex bank had at the Bankers Committee meeting recently revealed that N60 billion representing 20 per cent of the N220bn for the MSME development fund have been disbursed.

In the same vein, Fidelity Bank earlier raised about N30 billion loan to support the nation’s small and medium enterprises.

But in spite of the government and other financial institutions loan gestures toward the nation’s SMEs, some small scale operators, especially in Lagos said they have not accessed the loan.

Mr Eke Ubiji, Secretary, Nigerian Association of Small Scale Enterprises (NASME) said that none of its members have been able to access the loans. He said that the revised guidelines for establishing collateral securities to ease access to the loans were taking too much time, making the process more cumbersome.

Also speaking, Mr Duro Kuteyi, Southwest Chairman, Nigerian Association of Small Scale Industrialists, (NASSI) said none of his members have accessed the loan.

Some SME operators, who preferred to remain anonymous, said in separate interviews that they have lost hope in government loans because of some irregularities in the process.

They said that the bank officials told them that some bigger companies have been getting the MSME loans under the guise of being SMEs because they have equipment and landed property for collateral.

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