DMBs to support SMEs with ₦26 billion

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Deposit Money Banks (DMBs), yesterday announced the setting up of a projects review committee to oversee the disbursement of ₦26 billion equity funds for the Small and Medium Enterprises (SMEs) .

Members of SMEs Projects Review Committee include the Managing Directors of GTBank, Zenith Bank, First Bank, UBA, Access Bank, FCMB, Unity Bank, CBN Director of Banking Supervision and his counterpart in Development Finance Department. Chairman of the committee is to be decided at a later day.

The Managing Director of Union Bank Plc, Mr. Emeka Emuwa, made the disclosure in Abuja at the 334 meetings of the Bankers’ Committee.

In attendance at the briefing were Director of Banking Supervision of Central Bank of Nigeria (CBN), Ahmed Abdullahi, Managing Director, FSDH, Mrs. Hamda Ambah, and Executive Director, Standard Chartered Bank, Mrs. Mobola Faloye.

According to Emuwa, “one of the things we discussed at the Bankers’ Committee to support the growth in the economy was inaugurating the board of Agric and SMEs fund (₦26 billion). All the banks are supposed to set aside a portion of their profits, which would be made available for equity investment in agriculture and SMEs.

“So the board of the Project Review Committee of the Fund was inaugurated today. Basically, the fund is ready for implementation. In the next few weeks, there will be more communication as to how to access those funds. For entrepreneurs, small businesses and agriculture, the opportunity is there for equity funding for their businesses,” the Union Bank CEO said.

Also speaking, the Managing Director of FSDH Merchant Bank, Mrs. Hamda Ambah, advised entrepreneurs desirous of looking for fund to finance their businesses to approach their banks for detailed clarification.

“Those who are interested in equity to support their agricultural ventures or SMEs should approach their banks now and apply so that the bank will do a sort of preliminary review and pass these requests to the Project Review Committee of this organisation,” she added.

The new lifeline for SMES, an initiative of banks, was conceived last year to support SMEs and the agriculture sector. Banks agreed to set aside 5 per cent of their Profit After Tax (PAT) solely as investment on joint equity partnership with entrepreneurs of SMEs. This SMEs fund is aside of the CBN dedicated ₦220 billion SMEs fund.

Though about ₦26 billion has been pooled together by banks so far to finance SMEs on equity joint venture basis, the fund is expected to increase by the time banks compute their 2017 business operations.

Also yesterday, bank’s CEOs expressed delight on fast pacing of the economy on recovery trajectory. Unanimously, they said the economy has witnessed lots of improvement with potential to pick up better in the next quarter.

Speaking on the state of the economy, CBN Director of Banking Supervision, Ahmed Abdullahi, said the committee was of strong belief that the economy will come out of the recession soon.

“The discussion centered on the economy and the banking industry. The committee noted the turnaround in getting the economy out of recession. We have a very strong belief that the second quarter that just passed saw the economy emerging out of recession and there are reasons to believe this.

“Non-oil sector of the economy has witnessed positive growth although the numbers are not yet released by the National Bureau of Statistics (NBS). Because growth in this economy is driven largely by the non-oil sectors, a number of analysts believed that the economy would have been out of recession by the Q2 of 2017. We await the data from NBS and a number of other reasons as well. If you look at the confidence in the economy; if you look at the upsurge in the capital market; if you look at stability in the foreign exchange market, you will know that a lot of progress has been made in getting the country out of recession. This is a very healthy development and it is going to have a positive effect on the banking system as well as other sectors of the economy generally,” CBN Director of Banking Supervision said.

In her contribution, Executive Director, Standard Chartered Bank, Mrs. Mobola Fatoye, said one of the areas that gets everyone excited is the foreign exchange market.

“Thanks to the action of the CBN, an investors’ and exporters’ window was set up in May and it was very interesting when we were going through the meeting today and the statistics was given to us; the volume of trading that has gone on in that market is about $4 billion.

“That is a good figure and it shows that the bank has done a lot of rallying. It shows that the banks have been resilient,; it shows that the banks have contributed largely in bringing in as many Foreign Direct Investments (FDIs) and FPIs into the market. In fact, there was one particularly single ticket that was done on August 1, and the price of the transaction itself was $240 million. So we think that things are really going to be looking up. We are very hopeful that we are going in the right direction and we will eventually get to a stage where the rate will truly converge and that is where we want to get to,” she said.

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