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National MfB Will not Displace Other MfB – Emefiele

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Governor of Central Bank of Nigeria (CBN), Mr. Godwin Emefiele

Governor, Central Bank of Nigeria, CBN, Mr. Godwin Emefiele has reassured that the proposed National Microfinance Bank, MfB will not diminish the operations and existence of other microfinance banks in the country.

The governor of the apex bank explained that the new bank will offer loans to Small and Medium Scale Enterprises (SMEs) at five per cent interest rate and seven year tenor.

Emefiele disclosed this in Abuja during a facility tour of the Gwagwalada Abuja  branch of the bank, known as NIRSAL Microfinance Bank (NMB), adding that the bank would change the outlook of SMEs funding in Nigeria.

He said: “The existing microfinance are doing their best and I have heard this is an attempt to crowd them out but this is not an attempt to crowd them out but to complement their services and see to it that whatever services is being provided by these microfinance banks should be seen to be fair to their customers.

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“I also know about the rural communities where the microfinance banks charge very prohibitive interest rate but here we are talking about making fund available to these people. This will help to create some form of competitive landscape so that those kinds of practices will no longer arise.”

The governor said that the NMB has been designed to make it possible for SMEs operators to obtain long-term loans at five per cent interest rate, without collateral.

“Interest rate for this loan will be at  five per cent and the loan will be for a tenure of seven years with two years moratorium”, he said.

NMB was established through a tripartite collaboration between the NIRSAL (wholly owned by the CBN), the Bankers’ Committee and Nigerian Postal Service (NIPOST).

According to the governor, “This is collaboration between NIRSAL, Bankers Committee and NIPOST and I want to say that we really need to set up a microfinance bank that will reach out to the unbanked.

“The biggest problems that small businesses had always have is access to credit and I am happy that with the establishment of this microfinance bank which would be in at least one local government and we are talking about the 774 locations in all the country, we would be able to have a financial institution that will help deepen financial inclusion to make it easy for people to access credit particularly the small and unbanked people because we have always said that these are the very weak. So this is just part of our initiative to deepen financial inclusion in Nigeria.”