A presidential aspirant and former deputy governor of Central Bank of Nigeria (CBN), Kingsley Moghalu has pledged N1 trillion venture capital and credit fund that would fast-track and guarantee access to finance for small businesses if elected.
Muoghalu who was a guest speaker at 2018 Micro Finance Banking Conference on Friday in Abuja expressed concern over low impact of Micro-finance Bank with regards to reaching more financially excluded people.
“For financial inclusion to completely take place in Nigeria considering the changing times we inhabit,financial institutions like Micro Finance Banks should being to consider innovative ways in its developmental banking that is less government dependent,” Moghalu said.
He remarked further that beyond the below par performance of micro-finance Banks in the country,other developmental institutions such as the NEXIM Bank, Bank of Industry, Bank of Agriculture, in addition to its reporting lines to government’s ministry have enabled it not to perform optimally owing largely to government’s political interference in its decisions patterns.
On the heels of the below par performance of Micro-finance Banks in the country, Muoghalu promised that he would be more than ready to establish a N 1 trillion naira capital fund that would make access to finance easier for those with business ideas,that would crack down unemployment rate.
“This is absolutely necessary,because the credit system as we have today in Nigeria is not fulfilling these functions.We will introduce equity capital in a very big way. This might prove a business challenge for the Micro-finance Bank,because when you have competition that will give access to capital for a business to start new businesses especially for the unemployed people”
“The initiative Muoghalu said is going to be a strategic way of reducing unemployment in Nigeria,and the way those who don’t have jobs could have capital to start new businesses .If things function properly they would employ other people.”
Another idea we are looking at is also a Venture Capital and Credit Fund,is to have a line of support for the Micro-finance Bank so that the cost of loans dramatically drops. The problem of Micro-finance Banks lending to People at 40% and 50% interest rate in a year which is not sustainale would be adeqautely addressed with this initiative,Muoghalu said.
On the key reforms he embarked upon with the leadership of Sanusi Lamido Sanusi in their tenure,he said,”In 2009,a developmental Bank research shows that about 53% of adults were financially excluded in which enabled us then at the Central Bank to form a financial system strategy that would close such gaps,which was part of the sweeping reforms we brought into Nigeria’s banking sector under the governorship of Governor Sanusi Lamido Sanusi from 2009-2014.”
”Part of the reforms we embarked upon then to ensure we reduce the rate of financial exclusion in Nigeria to 20% by the year 2020.By 2014 with these sweeping reforms we are already at 39.5% drawing it down from 53% it was in 2009.”
Muoghalu pointed out further that,”The fundamental challenge we have in Nigeria in managing our economy is that we have not understood how capitalists economies create wealth.The fact is that whether we like it or not,Nigeria is a capitalist economy,”
According to Muoghalu,”For a capitalist economy to succeed,three things must be present,which is first property rights, innovations,and capital,and you know there is no capitalism without capital. We have not addressed our economy in such a manner that it begins to address these fundamental pre-requisites.”
“Micro-finance banks have a lot to do,with how we can push capital into our economy,especially with those at the tail end of the economic spectrum.”
In her ealier remarks,Aisha Ahmed, deputy Governor, financial system stability, CBN representing Godwin Emefiele the governor of CBN,said the apex bank is already taking some steps to ensure easier access to credit for small scale businesses through the credit reporting act, and the collateral registry act.
According to the CBN Governor, “We are all aware, MSMEs are the driver any nation’s economy activities not just Nigeria, statistics shows that the informal sector which 37 million SMEs in Nigeria belong contribute about 60% of our GDP. Like in every other developing country this sector is push up for job creation.”
“There is still more work to be done as micro finance bank is yet to attain their full potential in the Nigeria society. Despite the large number of micro finance banks, we can say that as at 2016, the finance granted by the micro finance banks amounted to 1.1% of the credit provided by regular money deposit banks,” Emefiele said.
