Nigeria’s first zero-interest lender, Jaiz Bank Plc has secured a N3 billion credit facility from the Bank of Industry (BoI) for on-lending to small business operators in the country.
The fund will help facilitate the bank’s operations in giving out loans to grow small enterprises, as well as develop the Micro, Small and Medium Enterprises (MSMEs) sector.
During the signing ceremony, the Managing Director of Jaiz Bank, Hassan Usman stated that small businesses will be able to access the funds to grow their businesses and create wealth.
“Fundamental to the vision and mission of Jaiz Bank is to create wealth for MSMEs. I want to assure you of maximum benefits to the stakeholders,” Usman said.
MSMEs key to economic development
MSMEs is of critical importance to the development of any economy but the sector has lacked the much-needed funding to contribute significantly in Nigeria. Realizing this, the BoI, through an intervention scheme, aims to deliver affordable finance to businesses which are unable to access funding from conventional means.
The disbursement to Jaiz bank, a non-interest lender will come as good news to owners of small businesses amid the outrageous interest rates microfinance banks in the country are charging on loans. Even bigger businesses sometimes default on loans with remarkably high-interest rates in Nigeria, with some manufacturing companies having to pay interest rates above 30 percent on loans.
Also in line with achieving the potentials of the small business sector as regards job creation and poverty reduction, BoI is working with several other financial institutions that are willing to support the sector.
According to BoI Executive Director, SMEs, Shekarau Omar, the development bank is already in partnership with 16 different financial institutions, adding that the sum of N3.8 billion had so far been disbursed under the initiative. BoI disbursement portfolio is expected to grow to N12 billion from N6.8 billion by the end of the intervention scheme.
Jaiz Bank Plc is the first non-interest bank established in Nigeria and is headquartered in FCT Abuja. Along with providing financial services, the bank is looking to drive financial inclusion with the use of agency banking, particularly for those in places where it is not physically present.