Malam Sani Bala Tanko was the Group Head, Public sector, Nasarawa/Plateau at the First Bank of Nigeria before he retired a few years ago. Now a farmer, he spoke about what government can do to make the Agri-Business/Small and Medium Enterprise Investment Scheme (AGSMEIS) loan more accessible for Small and Medium Enterprises (SMEs) owners.
Why do you think SMEs are finding it difficult to access the AGSMEIS loan?
A lot of people have applied for the loan through SMEDAN. They attended the training, did the business plan, and forwarded the application to the Central Bank of Nigeria. Some of these applications spent almost two years in the CBN, but nothing happened. Most of the people that applied were peasants/less privileged people but then nothing has been heard since they applied.
The AGSMEIS money is not from CBN; it is money set aside by the Bankers Committee to help SMEs especially in the agriculture sector, and then there is this unnecessary delay. Earlier, the money was to be disbursed through commercial banks, but now, the CBN created the NIRSAL Microfinance Bank and it wants to disburse through that means. Some SMEs applied since June, some October last year, but they have not been given the loan. The farming season is around the corner, in March or April, two seasons have gone, and many have not received the loan.
I think banks like Union Bank and First Bank have special departments to disburse Agricultural facilities, and it has been decentralised that if you apply for the agriculture loan, you can get it within one month.
As an ex-banker, what do you think government can do to make this loan easily accessible for SMEs?
The CBN should issue the loan through the conventional commercial banks, which have the capacity and the logistics to do so.
So you mean government should take it to the commercial banks?
Yes. This NIRSAL Microfinance bank, do they have the capacity? For instance in Jos, some of the banks have almost eight branches or more. These can service more SMEs which request for this loan than having just one NIRSAL Bank in a city or local government. Each manager in a commercial bank can be given the product paper to approve the loan, so it makes things easier. And when any SME that is given the loan defaults, the banks have a way to retrieve the loan. This is better than having NIRSAL which may not have the manpower to handle this.
But NIRSAL Microfinance Bank is working with NIPOST to disburse this loan, so that anywhere you have NIPOST office, the NIRSAL Bank will be there across the 774 local governments in the country. What about that?
Are you talking about one room banking system? They may have collected up to 400/500 loan applications per month, but how many staff do they have to handle that? Do they have adequate logistics? But look at a bank like Union Bank or First Bank; they have specialised departments for Agric. Loan, and they work hand- in- hand with Agriculture officers. They will go, survey the applicant’s farm, and make recommendation. And within one week, their recommendation is approved, and approval given for the loan and the money is released and monitored. But with NIRSAL, I don’t know how they interview the loan applicants.
Are you saying government should review the policy?
Exactly, people are disenchanted. The Federal government/ Bankers Committee have come up with this AGSMEIS loan idea, but to implement it has become a problem. Those that can handle and implement it are not given a chance.
Are you working with any SME group to enlighten them as well?
We have a group called the Josawa Group and we wanted to collaborate with SMEDAN. Our members did the training and wrote their business plan. We submitted to SMEDAN who took it to CBN then. But nothing has been heard since June last year. Nobody called any of us for an interview. But again, I must say it’s easier to give loan to a group than individuals. Because each member of the group knows himself, and can help in the recovery of the loan owing to the fact that they live in the same community.
So you are confident the government can disburse this loan better through the commercial banks?
Yes, nothing is dogmatic; things are dynamic. Let them try disbursing through the commercial banks, and they can look at where they can adjust it.
What is your recommendation then?
That government should allow commercial banks to disburse the AGSMEIS loan because they have the capacity, instead of allowing a novice in that area.
Are you aware that in South Africa, they will give you a facility/loan, and if you take it for any business like poultry, for instance, they will buy you the birds? They will help you in nurturing it to the level that they can lay eggs. Then they help you sell it. Then, they will reduce the interest rate when you pay up the facility early. That is partnership between government and people in the private sector.
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