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Considering the
challenges faced by microfinance banks in Nigeria, the Small and Medium
Enterprises Development Agency, (SMEDAN), on Monday signed a memorandum
of understanding with the banks.

Explaining the
reason behind the move, Mohammed Umar, the agency’s director general
said, “the essence of the MOU is to enhance the development of
microfinance bank in Nigeria and delivery microfinance services
effectively and create access to finance by the small and medium
entrepreneurs.”

Microfinance banks,
according to Mr. Umar, are the surest ways of ensuring speedy rural
industrialization and poverty eradication. Also in the bouquet of the
MOU with the 16 banks, is training of beneficiaries of microfinance
loans on how to successfully manage their loans. Mr. Umar stressed that
there was the need to boost microfinance banks activities to enhance
economic development and rural enterprise development programme and to
properly industrialize the rural areas, hence the need for state
governments to prioritize funding of the institutions.

Operational fund challenges

He noted that
microfinance face different challenges in getting operational fund
through which they could help in developing rural enterprises while
advocating that cheap fund with at least one digit interest rate of not
more than five per cent will be possible when the state governors fund
the microfinance banks in their areas.

“I appeal to them
to see how to provide these small businesses with cheap fund,” he said.
“I will plead with state governors to help in the area of accessing
fund for the micro finance banks at a lower rate, who will in turn give
it out to the SMEs; this is the only way small businesses could grow. I
plead for understanding and cooperation of the governors in this to
help the micro finance bank and develop the SME in their areas.”

The SMEDAN boss who
equally called for the establishment of at least one MFB in one local
government believed that access to fund by the operators will provide a
platform for industrialization of the rural areas, reduce rural urban
migration and curtail the social vices in the country. He further
described microfinance as the last hope of the low income
entrepreneurs, and economically active poor who cannot meet the lending
condition of the commercial institutions.

The agency boss also said microfinance services are also an
essential tool required in achieving the millennium development goals
and Vision 2020, adding that the memorandum gives the agency an
opportunity to solidify its contribution to the economic development
process of the medium and small enterprises. The micro finance bank
representatives noted that the financial crises and other problems in
the country are as a result of the collapse of the small enterprises
stressing that there is the need for intervention in fund assessment by
the operators to ensure their speedy resuscitation.