Association of Micro-Entrepreneurs of Nigeria (AMEN) has called on the federal government to establish a special bank for Small and Medium scale Enterprises (SMEs). Such a bank the association said would be able to process and release loans for the sector within 48 hours.
AMEN said that the bank should have a loan ceiling of not more than 5 or 10 million per applicant and may only grant loans to members of recognized commercial associations so as to guarantee granted loans and ensure easy and quick identification of borrowers.
This is even as the association requested that the Bank of Industry (BoI) should abolish the idea of 10 per cent cash deposit made on loans, stressing that the idea is not in the interest of struggling businesses that already have obligations to the government through several taxes and levies, payments of salaries to their workers.
Addressing Newsmen weekend in Lagos, National President of AMEN, Prince Saviour Iche said the 10 per cent is better invested in a borrower’s business than stashed away in a commercial bank where it yields nothing.
He said BoI should seek ways to eliminate unwarranted delays in processing loan applications and releasing funds and reduce the waiting gap to a maximum period of 30 days, adding that BoI through its policies has continued to kill small businesses in Nigeria and put the lives of business owners at risk.
Iche equally noted that economic prosperity can only come when financial sector regulators and institutions like BoI, Nigerian Export-Import Bank and the commercial banks are true to the aims and responsibilities for which they exist.He noted that it is a sad tale for micro-entrepreneurs in relation to the lending community such that the policies and processes put forward by this community continues to frustrate and kill businesses rather than help businesses to grow and expand.
He further disclosed that BoI has a funny but callous policy that requires borrowers to make a cash deposit of 10 per cent of the funds to be borrowed, adding that this development has led to closure of many businesses in Nigeria.
“The government has been shouting of ‘ease of doing business’ from the roof tops of Aso Rock, and here we are faced with a government institution demanding that struggling businesses make a cash deposit of 10percent of the amount we intend to borrow as part of requirements to secure loans. Is this policy closer to helping businesses operate with ease?
Giving a breakdown of the 10 per cent deposit, Iche said, “Supposing an entrepreneur needs a loan f N10 million from BoI, what it means is that, the entrepreneur must make a cash deposit, in other words, a down payment of 10 per cent f the loan to be borrowed to a commercial bank appointed by BoI.
“As of today the highest interest rate on savings with the commercial banks is 4.5 per cent, meaning that 4.5 per cent of N1 million, which is N45, 000 is paid as interest for one year by the commercial bank holding that deposited sum of N1million for BoI.
“Apart from the compulsory deposit of 10 per cent of the loan requested, the borrower still has to pay interest on the loan given by BoI. At the end of the loan period, the borrower would have lost more money in interest t BoI that what is received as interest on the borrower’s 10 per cent cash deposit held by a commercial bank for BoI.
“The question must be asked, where does BoI expect a borrower to get 10 per cent demanded by BoI, bearing in mind that a borrower must have submitted appropriate documents to guarantee payment of the loan borrowed in case a default.
“It is because of policies like this that we are yet to move our economy from the ground into the skies. In fact, as at last year, forty of our members have relocated their businesses to neighboring countries, twenty five businesses have wind up and seven deaths recorded due to frustration. Therefore, we call on financial sector regulators and institutions to put in place policies that are business friendly.
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