CBN to stop banks’ Cash Reserve Ratio funds

Godwin Emefiele
CBN Governor, Godwin Emefiele used to illustrate the story.

The governor of the Central Bank of Nigeria, CBN, Godwin Emefiele, says the apex bank may not release funds due to banks, following the reduction of the Cash Reserve Ratio, if they failed to lend to SMEs.

Mr. Emefiele made the declaration at the 7th Annual Bankers’ Committee Retreat on Thursday in Lagos.

The CBN had reduced the CRR from 25 per cent to 20 per cent in November.

Mr. Emefiele said banks had not played active roles in terms of lending to SME operators in the country.

Mr. Emefiele said the country was entering a phase where SMEs must be given priority in the nation’s growth.

He said operators in the banking industry must change, rethink and behave in ways that banks could support the SME sector.

The CBN boss said the economies that withstood the global shocks were SME-driven countries.

Mr. Emefiele said the CBN would soon unveil a scheme that would assist young graduates to unleash their potential on their chosen fields.

He said the apex bank planned to come up with a scheme to assist young graduates with loans that would allow them work and pay back.

The governor said the scheme would be different from the existing N220 billion Micro, Small and Medium Enterprises Development Fund launched in 2013.

“We need to begin to agitate our minds and consider how we can support the young minds. Let’s give them a chance.

“The details of SME programme is going to be separate from the N220 billion.

“I am saying if you refuse to support, your money that we would have released through the CRR, we will take that money and lend it through any channel that will give these young graduates jobs.

“We all need to think together and agree because there is no need to release the money to you and all you do with the money is buy treasury bills.

“It can’t continue. We need to agitate our minds; we need to think about the best ways to diversify this economy away from oil.

“We need to get more and more people to be employed and we would need the support of the banks to begin to see how we lower our risk acceptance criteria to give support to our young graduates,” he said.

He said the CBN, in a few months, would unfold plans to create employment opportunities for young graduates by 2016.

The Lagos State governor, Akinwunmi Ambode, said the state would soon complete the legislative process to inaugurate its employment trust fund board of trustees.

Mr. Ambode said the funds would allow youths and entrepreneurs, particularly in the social enterprise sector, to be supported.

The governor said the state would start the funds with N25 billion in the next three years.

He said entrepreneurs had not accessed up to 20 per cent of the employment trust fund.

“I just want to say you know mine is like an intervention fund of which we believe strongly that the interest that we are going to charge will not be more than three per cent,” the CBN governor said.

The Minister of Finance, Kemi Adeosun, said the country was going through hard moments, but would only overcome its challenges if there was support to the SME sector.

Ms. Adeosun said that sector contributes up to 50 per cent to the Gross Domestic Product, GDP.


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