MARK ITSIBOR evaluates the loan disbursement activities of NIRSAL microfinance bank in line with its mandate
For some of the beneficiaries of the intervention loans of NIRSAL microfinance bank, the Central Bank of Nigeria-funded loan facility couldn’t have come at a time better than now. The general view is that the credit facility has been able to assist them in reviving their businesses that were badly affected by the negative impact of the Coronavirus pandemic.
A beneficiary, Mr. Gabriel Kuma, who is based in Abuja said he decided to collect the loan in order to start a business. He said having to depend on salary alone was affecting his standard of living and with the impact of the Coronavirus pandemic which led to the loss of income for firms and individuals, there was a need to come up with a sustainable means of income.
Kuma invested his loan in food production and commodities trading. Kuma who commended NIRSAL MFB on the ease at which the application process was done said his decision to go into food production was based on the conviction that there is always a huge demand for food.
“Predictions from Covid-19 had it that there will be a global recession owing to lockdown both globally and in Nigeria,” he said, adding that as an employee then, “I needed to figure out what brings an extra stream of income to me so as to cushion the effect of the recession.
Another beneficiary of the loan, Mr James Agasi said he was able to expand his existing business with the NIRSAL facility.
James who is also based in Abuja said having spent a substantial part of the capital of his business to survive the impact of the Coronavirus pandemic on the economy, there was need to inject fresh funds into the business.
He has two supermarkets and they were all doing well in terms of sales and profitability until the coronavirus induced lockdown in 2020 when things became tough because he could not open his retail shop as the market was totally shut.
“Since the entire economy was on shutdown then, there were no fresh funds coming from my businesss. We have to survive and as such, the little money I had in the bank which I had kept to buy goods was what we fell back on for survival.
“So we started spending from that money until the restrictions were eased. I needed fresh capital and I approached our market association to borrow money but the demand from other members for loan was too much on the association.”
The MD of NIRSAL Microfinance Bank, Abubakar Kure had urge beneficiaries to use the fund for the purpose it was collected for because the bank would ensure that all those who took the facility must repay what they took.
He said, “This is not a grant, it is a credit facility intended to cushion the impact of COVID-19 on businesses particularly SMEs.
“SMEs are the engine of any economy because they provide employment and taxes to government.
“We urge people to apply, you don’t need to know anybody before you apply and once you qualify, you will be given the loan.”
Cumulatively, the bank has impacted the lives of many Nigerians through the disbursement of a total of N408.54bn to 712,477 beneficiaries.
In 2018, the Bankers’ Committee and the CBN announced the decision to establish a National Micro Finance Bank, with a focus on enhancing access to credit and efficiently deploy funds created by the banking sector to boost activities of critical sectors of the economy.
The bank is designed to have offices in all the 774 local government areas of the country facilitated through a collaborative arrangement with the Nigerian Postal Service (NIPOST). Access to credit has been a major bottleneck to the disbursement of the Central Bank of Nigeria’s intervention funds.
The idea behind the National MFB is to, in addition to the existing channels such as the Commercial Banks, Bank of Agric, Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) and some of the reputable micro finance banks, be a channel where these funds will be deployed fast and in a meaningful way that it is useful to the farmers and micro and small businesses.
Armed with this objective, the NIRSAL MFB was licensed by the CBN and was incorporated as a Private Limited Company in 2019 and commenced operations following the grant of a license by the Central Bank of Nigeria to operate as a National Microfinance Bank in the same year.
The Bank is owned 75 per cent by the Bankers Committee, 15 per cent by NIRSAL, and 10 per cent by NIPOST.
The bank commenced operations with seven pilot locations in Abuja, Bauchi, Ibadan, Kaduna, Enugu, Port Harcourt and Lokoja.
To drive the vision of the founding fathers of bank, the Central Bank appointed Mr. Abubakar Abdulahi Kure as the managing director of NIRSAL Micro Finance Bank.
Official data suggest that the bank has been able to boost access to credit through targeted intervention programmes to house holds, small and medium enterprises and Agri-businesses.
The Agricultural business and small and medium enterprise investment scheme AGSMEIS is an initiative to support the federal government’s efforts and policy measures for the promotion of agri-businesses as vehicles for sustainable economic development and employment generation.
Under the AGSMEIS, businesses can access up to N10m at five per cent per annum. In implementing this scheme, NIRSAL MFB says it has disbursed the sum of N96.1bn to 241,182 beneficiaries within the last two years.
According to its MD, Abubakar Kure, NIRSAL MFB has so far disbursed N30.09bn to 96,345 beneficiaries.
The catalytic impact of this disbursement is evident in the increase in agricultural output that has been recorded within the last two years.
For the Small and Medium Enterprises sector, the bank has also demonstrated its commitment to making finance accessible to operators of the sector.
Before now, the potential of SMEs in enhancing economic growth was hampered by limited access to finance and high-interest rate among others. But by simplifying loan procedures and with a low interest rate, NIRSAL MFB under the transformational leadership of the current Managing Director is changing this narrative.
Within the last two years, the bank has provided funding of up to N86.42bn to 78,289 SMEs.
Industry watchers say that has assisted in leap-frogging the pace of the sector’s contribution to the country’s Gross Domestic Product and boost job creation for Nigerians.
Under the Household credit facility, the bank has made significant progress in providing consumer credit to Nigerians.
Intervention credit facilities of the CBN that were introduced to cushion the effect of the COVID-19 pandemic last year appear to be getting to Nigerians. According to NIRSAL microfinance Bank, N195.93 billion has so far been disbursed to 513,389 households.