Microfinance institutions (MFIs) in Nigeria want to bypass commercial banks to access government money in the form of a ‘meso’ credit scheme designed by the National Poverty Eradication Programme (NAPEP) – a government agency responsible for coordinating and monitoring all poverty eradication activities nationwide – to provide loans of between NGN 500,000 (USD 3,300) and NGN 50 million (USD 331,000) for agricultural processing in rural areas. The current regulations mandate that the meso credit funds be distributed to commercial banks for on-lending to qualified microfinance banks at “competitive rates.” However, according to Odukoye Olusoki, the chief executive officer of Imode Imosen Community Bank, a microfinance bank based in Ogun state, “Subjecting [the loans] to commercial banks will be counterproductive because most of the commercial banks today also operate microfinance banking, so how can [one] be sure that they will be fair as competitors?” Furthermore, Mustapha Mohammed, the managing director of Phonix Microfinance Bank in Niger state, said, “Most commercial banks are not interested in rural transformation, which is a contradiction to the goal of the meso credit scheme.”
By Conner Brannen, Research Assistant
About the National Poverty Eradication Programme (Nigeria):
Established in 2001, the National Poverty Eradication Programme (NAPEP) is a government agency of Nigeria responsible for coordinating and monitoring all poverty eradication activities nationwide. NAPEP aims to build partnerships between the public and private sector in order to more effectively and sustainably deliver poverty eradication programs.
Sources and Additional Resources:
AllAfrica: “Micro Banks Want Direct Access to NAPEP?s Fund,” June 28, 2010: http://allafrica.com/stories/201006280464.html
MICROCAPITAL BRIEF: Head of Nigerian Deposit Insurance Corporation (NDIC) Announces Completion of Review of Distressed Microfinance Banks, Outlines Path to Sanitization, June 25, 2010: https://www.microcapital.org/microcapital-brief-head-of-nigerian-deposit-insurance-corporation-ndic-announces-completion-of-review-of-distressed-microfinance-banks-outlines-path-to-?sanitization?/
MICROCAPITAL BRIEF: International Finance Corporation (IFC) Partners with eTranzact to Launch Rural Telephony Project (RTP) MobileMoney in Nigeria, June 25, 2010: https://www.microcapital.org/microcapital-brief-international-finance-corporation-ifc-partners-with-etranzact-to-launch-rural-telephony-project-rtp-mobilemoney-in-nigeria/
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