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Published On: Sun, Sep 7th, 2014

MSME N220bn Fund: There will be no defaulters – Micro Finance Association

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Mr Valentine Whensu, the President, National Association of Micro Finance Banks (NAMB), has said that there would be no defaulters on the N220 billion loan from the Central Bank of Nigeria (CBN).

Whensu said this in an interview with the News Agency of Nigeria (NAN) in Abuja yesterday.

He said that a system of biometrics had been designed to check any fraudulent and multiple borrowing by an individual. “ In micro finance banks you must carry out the biometrics such that if you like you can mention your name as Segun Johnson and go to another bank. “Because that’s what we do to avoid serial borrowers, they will go to another place and say they are John Olu, so it is still the same name that was called in another way.

“But to avoid that your finger prints cannot deceive you; anywhere you go to they will say you have already opened an account somewhere else before.

“ So with that we will first kill the idea of people moving from one bank to the other in order to collect money so you are sure that that won’t be there,’’

According to him, the biometrics would ensure that defaulting will be checked and penalised.

He said CBN’s collaboration with NAMB had established the criteria which comprised of the interest rate and collateral required to enable access to the fund.

Whensu said some conditions had already been put in place to ensure zero default rates for those accessing the MSME fund. “The MFBs that is accessing this fund, one of the collateral they are dropping is a financial asset which is either treasury bills or bank guarantee.

“ If you put a bank guarantee, it is on that MFB to ensure that whoever collects that money pays it back or they will be losing their bank guarantee or treasury bills.

“Again, because we are routing this money through groups, there is a social pressure on the group members to ensure that all their members pay this money for them to use it again.

“We have a third one which is the credit bureau, a credit check is conducted on you.

“ You never can say that because you collected N50,000 somewh ere you think you can run away, there is a report that will show it,’’ the president said.

In order that these funds are not diverted to other use, the president said that a business plan must be submitted by the benefactor which must be properly followed.

He said that there was also a monitoring and evaluation desk in every MFBs which the CBN also keeps tabs on constantly.

“ There exists a desk that is called monitoring and evaluation in every MFBs and also in CBN and we must keep tabs on it.

“ Again, if you are also setting up an organisation that needs  supplier’s credit we will rather issue the check directly to those suppliers who will bring in equipment for you than give you the money.

“ So there is a way to provide checks and balance to ensure that this money is actually channelled to the purpose it is meant for,’’ he added. (NAN)

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