CBN targets 20% increase in micro-credits by 2020

Posted by admin CBN (Central Bank of Nigeria), Latest Politics Monday, April 29th, 2019

Omodele Adigun, Uche Usim and Chinwendu Obienyi

In a bid to increase access to financial services for the nation’s economically active poor, enhance job creation and reduce poverty, the Central Bank of Nigeria (CBN) has said that it will be targeting an increase in total micro-credits to at least 20 per cent by 2020.

This was even as it revealed that as at December 2018, aggregate loans granted by microfinance banks was in excess of N480 billion.

Speaking on the theme, “Repositioning Micro-Finance Banks (MFBs) for Real Sector Growth” during the 27th seminar for Finance Correspondents and Business Editors in Gombe at the weekend, the CBN Governor, Godwin Emefiele, noted that repositioning MFBs for real sector growth was very necessary as a catalyst for financial inclusion and poverty reduction.

Emefiele, represented by his Deputy in charge of Corporate Services, Edward Lametek Adamu, stated that CBN in 2005 formulated an MFB policy, regulatory and supervisory framework aimed at bringing MFB institutions and activities into greater focus in order to deepen financial inclusion.

He said the apex bank then worked towards increasing access to financial services for the economically active poor to enhance job creation and poverty reduction and has set its target to increase the share of total micro-credit percentage to at least 20 per cent by 2020.

According to him, the link between microfinance and the real sector is quite small. He explained that while the MFBs were conceived to serve as critical financial lubricants, the real sector is the pillar for sustainable growth.

“At the moment, economic policy in Nigeria faces major challenge in reviving growth, which is the only sure path to ending poverty and microfinance banking has worked in this regard in many economies and promises to work in Nigeria only if it is rightly done,” he noted.

Emefiele said that by increasing access to credit and related services in an economically active sector of low income population, microfinance directly contributes to expanding the production base and is therefore a credible strategy for increasing financial inclusion and reducing unemployment.

“Accordingly, the bank in collaboration with other agencies of government, is implementing various intervention schemes. Data from the licensed credit bureaux indicate that operations of MFBs have had to improve financial inclusion among small farmers, artisans and other business operators and as at December 2018, as aggregate loans granted by microfinance banks were in excess of N480 billion.

“Of this amount, loan sizes beyond N1.4 billion accounted to more than 70 per cent and we observed that small businesses have been successful in securing credit for MFBs.”The apex bank’s chief assured the public that CBN remained committed to economic empowerment of disadvantaged groups and is working assiduously to address the challenges obstructing the growth of MFBs in the country.

Earlier in his welcome address, Branch Controller, CBN, Gombe, Shehu Goringo, said that microfinance should not be relegated as it is becoming important in other climes.

Goringo said, “microfinance is the cornerstone in the promotion of rural development through financial literacy, deposit mobilisation and credit delivery to finance micro-enterprises, agriculture and boosting small scale enterprises and therefore should not be relegated.”

-Sun

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