Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL), a Microfinance Bank incorporated as a Private Limited Company in 2018 with license from the Central Bank of Nigeria (CBN) would provide loans without collateral to Small and Medium Enterprises (SMEs) at a single digit interest rate of five percent.
This was disclosed by the Governor of the Central Bank of Nigeria, Mr Godwin Emefiele, while inspecting NIRSAL Microfinance Bank in Gwagwalada, a satellite town in Abuja on Wednesday.
Established with a capital base of N5 billion, NIRSAL Microfinance Bank is a collaboration between the Banker’s Committee, NIRSAL and the Nigerian Postal Service (NIPOST).
The Bankers’ Committee holds 50% stake in the bank, having provided the setup capital, while NIRSAL and NIPOST own 40% and 10% respectively.
NIRSAL was created by the CBN to stimulate the flow of affordable finance and investments into the agricultural sector by de-risking the agribusiness finance value chain.
Emefiele said NIRSAL Microfinance Bank would help to deepen financial inclusion, and enable the CBN to achieve its 80 percent financial inclusion target by next year.
Emefiele said that NIRSAL is expected to expand available options and empower small businesses across the 774 local government areas of the country, adding that seven branches have been established, with 50 more being planned in the next phase.
Emefiele said the loans will be offered at five percent interest rate, with a repayment period of seven years and a two year moratorium, without collateral.
The fund was set up by the Bankers Committee at the 331st meeting held on February 9, 2017, to improve access to affordable ﬁnancing for Micro, Small and Medium Enterprises, particularly those operating in the informal sector of the economy.
As a commitment to the successful implementation of the scheme, all Deposit Money Banks voluntarily agreed to set aside and contribute five percent of their proﬁt after tax annually to ﬁnance eligible projects under the scheme.
“The asset that we are financing for them will act as the collateral. That collateral will be registered in our national collateral registry as something that is eligible to serve as collateral or security for a loan that has been taken.” Emefiele said.
On the notion that NIRSAL Microfinance Bank may crowd out other microfinance banks, Emefiele said that was not the objective for its establishment. He said NIRSAL Microfinance Bank would complement the services of existing microfinance banks, and ensure that the services they provide are fair to their customers.