The Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, has said the Federal Government will review the criteria used by the Development Bank of Nigeria (DBN) to disburse loans to the Medium and Small Scale Enterprises (MSSEs) to ensure geopolitical spread.

Ahmed gave this hint when she appeared before the Senate ad hoc committee probing alleged uneven disbursement of the N500 billion Federal Government loans already given out to MSMEs by the DBN.

Senate President Ahmad Lawan, while commenting on a motion by Senator Mohammed Ali Ndume, had set up the ad hoc committee, headed by Senator Sani Musa, to investigate the matter.

Ndume had claimed that the Southwest, especially Lagos State, had the largest number of the loans beneficiaries.

The chief executive officers of the affected banks, like the DBN and the Bank of Industry (BoI), among others, had told the panel that they adhered strictly to the criteria set up by their regulators and not geopolitical considerations in giving out loans.

Members of the committee, especially those from the North, disagreed with the banks’ CEOs and insisted on the review of the criteria because the development banks were established to ensure even distribution of wealth across the country.

They demanded that the loans disbursement criteria must be less cumbersome so that MSMEs from all part of the country would be able to access it.

They summoned the Finance Minister to address their concerns.

Appearing before the panel yesterday, Mrs. Ahmed promised to meet with the development banks management and their regulators, the Central Bank of Nigeria (CBN), to carry out the review of the criteria for the loans disbursement.

The minister cautioned that such a review would not be too flexible to ensure the sustainability of the development banks.

She said: “I have been given copies of reports already submitted to the committee by the development banks.

“The criteria to access funds from the development banks are set by the supervising ministry. The last one was targeted at the technology sustainability plan.

“The Development Bank of Nigeria was set up to enhance the development of the MSMEs across the country, but it doesn’t lend directly to the beneficiary businesses. Instead, it lends to them through microfinance banks (MFBs). The MFBs also provide criteria for the lendees and do credit analysis. They send their reports to the DBN, which would collate the report and approve for disbursement.

“The criteria set by the DBN was reviewed by the regulator and approved by CBN. The Bank of Industry (BoI) was set up to also stay healthy as a bank. It has done very well in terms of loans repayment. It is the only financial development institution that is giving dividends to the Federal Government.

“The BoI has also been able, on its own while using its balance sheet, to raise resources from the domestic capital market as well as from the international capital markets.

“It is doing quite well in terms of its performance. But we hope it could do more and use its exposure to do more.

“Right now, we are struggling to reinvigorate the Bank of Agriculture, which was also subjected to regulations and criteria, in areas that would make it stay afloat and make some certain level of returns because that is what would provide efficiency in the bank.

“If government continues to provide intervention funds without adherence to criteria to sustain the existence of the banks, it will threaten their existence.

“I agree that we have to strike a balance between the survival of the banks, their profitability and the development objective of setting them up.

“Our ministry and the regulator, which is the CBN, will review the criteria so that we could strike a balance that would enable the banks to do more where development is much more needed.

“I have also seen reports of the development banks and noticed the uneven disbursement of their loans.

“We also have to be careful so that the banks would not use the review of the criteria as an excuse.

“For instance, before the current management of the Bank of Agriculture took over, the CBN just released funds and gave lists of those to give money to without giving us the opportunity to scrutinise the beneficiaries.

“At the end of the day, 90 per cent of the facilities failed. We would also involve the National Assembly so that we would strike a balance between the objective of setting up the development banks and the need to make sure that they stay afloat and have a healthy balance sheet to be able to continue to do their work…”

Senator Musa said the Federal Government supported the development banks so that they would not be using the same considerations that commercial banks use.

“We want to know the conditionalities that are making it very difficult for the MSMEs to access funds from the development banks. There is the need to look at it critically.

“We want to know the criteria being used by the development banks to disburse funds, because we know that the standards were set by the Central Bank of Nigeria.”

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