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59th Anniversary: National Microfinance Bank Gifts Nigerians Pro-SME Collateral-free Loans

National Microfinance Bank
Mama Ayo Meets National Microfinance Bank
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Mama Ayo runs a small shop in a busy part of Yaba where she sells Aso Oke. Audu does same, but in Kano. Emeka runs a small spare parts business, but in Nnewi. Apart from the fact they are all Nigerians, their equal access to the National Microfinance Bank’s Agri-business Small and Medium Enterprise Investment Scheme (AGSMEIS) unites them all.

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The AGSMEIS is an initiative of the Banker’s Committee and the CBN, to support the FG’s pro SMEs policies.

Part of the reason Emeka has refused all the loan options available to him is because of either high interest rates from banks, or unavailability of collateral. The latter is usually the biggest problem, because most traditional loans would request large values of collateral for loans smaller in value. This likely scares people who do not have the collateral or who may not be sure of the business they are going into.

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Audu would prefer to keep making his marginal profit than risk putting his haulage truck in the line for a loan of one million Naira.

If you were Audu, you’d do same.

However, the AGSMEIS may have fixed this with an Independence Day Gift, by conceding to grant as much as 10m collateral-free loans to Nigerian small and medium enterprises, for either launching or expansion. Noteworthy is the fact that this loan scheme is available, today, tomorrow and whenever.

Collateral-free?

The idea is to target as much SMEs who do not have available collateral to access bank loans. Nonetheless, if Mama Ayo borrows 10m to start another Aso Oke branch in Festac, the Festac Branch becomes a collateral. With this, Mama Ayo will not have to put her Yaba shop in the line, and Audu will never have to put his truck up as a collateral, while they enjoy a 5% interest rate loan.

While this 5% per annum interest loan may not be free, it seems free, considering that the going market interest rate is around 17% per annum, and the CBN rate is pegged at 13.5% per annum.

Do not take anyone’s word for it. Google it.

That may not be all.

Through the AGSMEIS, National Microfinance Bank supports SME growth with business training delivered by Entrepreneurship Development Institutes and Centres (EDIs) which also guides and assists SMEs in getting all necessary documents required to secure loans from the scheme.

This puts the problem of bottlenecks to bed, since the MFB will train you on, not only documentation and filing, but also on entrepreneurship.

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Wouldn’t you go for it?

Agreed, there is a question of bureaucracy and red tapes which may be unique to the public sector. Perhaps you may have tried some other government-backed loans and it did not turn out so well, or you heard so. While this does not promise to be any better, this is at least a private sector-led effort and their chase for a satisfied client base is a major positive.

Hence, you may just want to give it a try and if it works, you come along with your family members.

Having Doubts?

The National Microfinance Bank was incorporated as a Private Limited Company in 2019 and commenced operations following the grant of a licence by the Central Bank of Nigeria to operate as a National Microfinance Bank in the same year. It is Owned 50% by the Bankers Committee, 40% by NIRSAL and 10% NIPOST.

Finally, this loan is not just available to Mama Ayo’s Aso Oke business or Emeka’s Spare Parts business. It is also available to you, a graphics designer, developer or restaurant owner. As a matter of fact, the AGSMEIS loans are available to eligible SMEs across the Information Technology, Creative, Arts, Industrial, Agricultural, Manufacturing and hospitality industries.

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As said earlier, in matters of finance and loans, rigorous research is your best friend. Here is a great place to start your research.

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