The Central Bank of Nigeria (CBN) has demonstrated its commitment to supporting small and medium enterprises (SMEs) in the eastern region of Nigeria, an economic nerve center of West African, by making N500 million ($2.73 million) available to the Enugu State Government to finance 1,600 micro enterprise borrowers.

These institutions were recommended by the Enugu Small and Medium Enterprise (SME) Center under the state Micro, Small and Medium Enterprise Development Program (MSMEDP).

This was disclosed by Mr Anayo Agu, the Special Adviser to the Governor on Small and Medium Scale Enterprises in a statement. According to him, the funds represented just the first tranche of over 3500 potential beneficiaries of the Enugu State-CBN Micro, Small and Medium Enterprise Development Fund (MSMEDF). The second tranche will comprise small and medium enterprise borrowers and is expected before the end of the month.

This development comes as a sequel to the memorandum of understanding signed between the CBN and 12 states, including Enugu, on the platform of the CBN 220 billion naira ($1.2 billion) micro, small and medium enterprise development fund (MSMEDF). In the course of the past five months, the state has prospected for borrowers via outreaches held in local councils, major commercial towns and religious groups in the state.

His statement indicated that all enterprises within the state could apply for the loan regardless of political and religious affiliations. The key criteria for deciding what enterprises get the loans would be the program’s guidelines, and once they are met, applicants including farmers, cooperative societies, or NGOs may borrow at least 100,000 naira ($545) for one year under a micro venture or a maximum of 50 million naira ($272,554) for five years to build a small or medium cottage industry.

The state has also undertaken the risk for the loan from the CBN by paying the 3 percent interest to the apex bank and waiving it such that the burden is heavily reduced on potential borrowers, thus making the loan truly soft. The state has also insisted that the participating micro-finance banks take no more than 6 percent as administrative charge or interest rate per annum; this is inclusive of all bank charges for the three categories of loans under the fund.

The growing support for SMEs in Nigeria is indicative of an understanding of the big role they play in developing the economy, driving productivity and reducing unemployment. As funding becomes less of an issue for SMEs, it will be useful to ensure the availability of skilled personnel to keep these business units functioning according to their manifesto.

By Emmanuel Iruobe

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