The Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL), a unit of the Central Bank, has said the controversial fees it demanded from applicants seeking emergency loans for small businesses hit by the coronavirus pandemic, will no longer “be mandatory.”
The unit said an “automated business plan” which the fees covered, would no longer be mandatory.
The CBN had announced a N50 billion package for small businesses affected by coronavirus, to allow them stay in business and not lay off workers.
But controversy erupted last week when applicants revealed they were asked to pay fees even when they were uncertain to receive the loan. The amount ranged from N3,000 t0 N10,000.
According to the Ministry of Industry, Trade and Investment, the million micro, small and medium-scale enterprises, MSMEs, account for more than 84 per cent jobs in the country.
The CBN had earlier denied asking for fees on the loan, saying it was “fake news”. It also said the procedure for the application was clearly spelt out.
That claim was untrue as some applicants later presented evidence they were indeed asked to pay.
On Tuesday, the managing director of NIRSAL, Abubakar Kure, amidst public outrage, gave reasons why payment was demanded.
He said the application initially required a business plan and they outsourced to a third party to help applicants.
“At the start of the process, business plans which NIRSAL received from loan applicants were highly substandard and to ensure a high standard and efficient processing, an optional, automated business plan was provided by a service provider at a highly discounted fee,” Mr Kure said.
“This is to avoid applicants being charged excessively by other consultants and to help people during the stay at home period and to make the application process easy.
“We got a third-party service provider to enable applicants to access the business plan through the internet.”
He, however, said the management of the bank later resolved that the business plan was no longer a mandatory requirement.
He did not explain whether that means some applicants may chose to pay and what benefits they could receive.
The agency did not also specify if and when the applicants who had paid earlier would be refunded.