Lack of access to finance has been one of the many challenges of farmers in developing countries. Nigeria is not left out, as farmers complain of inadequate financing for their businesses.
Although, there have been several interventions, the Federal Government continues to creates program that will ease farmers access to finance, one of which is the establishment of a Microfinance Bank.
The NIRSAL Microfinance Bank in February commenced operations with the aim of empowering about 400,000 Small and Medium Enterprises, SMEs, within its first two years. The NIRSAL, Nigerian Postal Service and the Bankers’ Committee all birthed the NIRSAL Microfinance Bank, NMFB, with the Bankers Committee as the capital shareholder owning 50 per cent of the bank, while NIRSAL and NIPOST own 40 per cent and 10 per cent respectively.
NIRSAL, explained that the goal is to expand opportunities and empower SMEs across Nigeria through structured microcredit to help them grow their businesses. National Coordinating Consultant, NIRSAL MFB, Dr. Steve Ogidan, noted that the new microfinance bank would have network of branches in all the 774 Local Government Areas of the federation and the FCT.
The objective according to the agency is to drive and deepen financial inclusion, provide easy access to credit and other financial services to SMEs, reduce unemployment rate in the rural areas, and reduce rural-urban migration. Speaking on the recent development, the Chairman, NIRSAL MFB, Mr. Aliyu Abdulhameed, revealed that millions of small entrepreneurs and smallholder farmers in the country would be effectively served by the banks. “The mission and strategy of NMFB are focused on making significant, sustainable and measurable impact on small businesses across Nigeria and by extension, on the lives of millions of Nigerians dependent on them in the overall interest of the economy,” He said. The initiative is to put money in the hands of Nigerian farmers at low interest rate of 5 per cent with a seven year tenor and a two year moratorium. NIRSAL has close to N60 billion funds in Nigeria Money Banks’s vault which farmers are not able to access. The microfinance initiative is to establish microfinance bank branches in all the 774 local governments in the country.
The CBN Governor Godwin Emefiele during the flag off programme said the first seven branches to be opened will be located in Ibadan, Port Harcourt, Bauchi, Kaduna, Enugu and Lokoja. Speaking during a facility tour of Nigeria Incentive-Based Risk Sharing System for Agricultural Lending, NIRSAL, microfinance bank in Gwagwalada, Emefiele said the capital base of the new NIRSAL Microfinance Bank will initially be N5 billion. He said this new microfinance banks which is collaboration between the Bankers Committee, NIRSAL and NIPOST will see the establishment of seven Microfinance banks in the six geopolitical zones and the Federal Capital Territory, FCT.
to concerns raised in some quarters that the creation of NIRSAL Microfinance
Bank across the country will crowd out other Microfinance Banks, the CBN
governor assured that the fear of crowding out is unfounded stating that “The
existing microfinance banks are doing their best. I have heard this is an
attempt to crowd them out. This is not an attempt to crowd them out, but to
complement their services and see to it that whatever service is being provided
by these microfinance banks should be seen to be fair to their customers. “The
rural communities where the microfinance banks charge very prohibitive interest
rate. But here, we are talking about making funds available to these people.
This will help to create some form of competitive landscape so that those kinds
of practices will no longer arise.”