SWITZERLAND, JULY 20 – The CBN has earmarked 60% of its N220 billion Micro, Small and Medium Enterprises Development Fund for female entrepreneurs as a way of strengthening financial inclusion and contributing to the development of women in the country.
Two percent of the wholesale component of the fund would go to economically active persons living with disabilities while 10 percent will be provided for start-up businesses.
In a circular on, “Guidelines for micro, small and medium enterprises development fund for non-interest financial institutions,” signed by the Director, Development Finance Department, CBN, the apex bank noted that the sub-sector is characterised by huge financing gap which hinders the development of MSMEs.
It read “Section 6.10 of the Revised Microfinance Policy, Regulatory and Supervisory Framework for Nigeria, stipulates that ‘a Microfinance Development Fund shall be set up, primarily to provide for the wholesale funding requirements of MFBs/MFIs.
“To fulfil the provisions of section 4.2 (iv) of the policy, which stipulates that women’s access to financial services to increase by at least 15 percent annually to eliminate gender disparity, 60 percent of the Fund has been earmarked for providing financial services to women.”
This informed the decision of the CBN to establish the MSMEDF, which has a take-off seed capital of N220bn.
The fund prescribes a 50:50 ratio for on-financing to micro-enterprises and SMEs respectively by Participating Financial Institutions.
The commercial component will constitute 90 percent of the Fund which to be disbursed in the form of wholesale funding to the PFIs.
It added that the objectives of wholesale funding were to provide facilities to eligible PFIs for on-financing to MSMEs; improve the capacity of the PFIs to meet the credit needs of MSMEs; and reduce the rate of financing to the PFIs and the beneficiaries.
The developmental component, which makes up 10 percent of the remaining fund would be earmarked for developmental programmes in form of grants.
According to the CBN, the 10 per cent grant would be utilised for the general development of the MSME sub-sector in the areas of capacity building, development of appropriate regulatory regime for MSMEs financing, financial literacy and entrepreneurship development.
Others are mobilisation, training and linkage of MSMEs to financial services, research and development of MSMEs-friendly financial innovations and products, business development and advisory services and building of financial infrastructure to support the growth of MSMEs.