SMEDAN DG Warns Nigerians that needs FG loans
SMEDAN DG Warns Nigerians that needs FG loans
SMEDAN DG to SMEs: You must repay FG loans; they are not free money. The Small and Medium Enterprises Development Agency’s (SMEDAN) director-general, Charles Odii, states that loans to small companies are only intended for production upscaling and are not intended as “free money.”
In a recent interview with TheCable, Odii stated that the organization collaborates with commercial banks to guarantee debt collection and disbursements.
With his remarks, Odii expresses his fear of bad loans, a topic that has drawn the attention of numerous financial organizations, most notably the Central Bank of Nigeria (CBN). To provide funding for higher agricultural output in Nigeria, the CBN launched the anchor borrowers’ scheme in 2015.
The regulator announced in September 2022 that it will implement the scheme’s global standing instruction (GSI) against loan defaulters. To resolve defaults, the plan was to start direct debits from loan holders’ bank accounts.
The Apex Bank halted accepting new loan applications for processing under any of its current intervention programs and schemes on December 13, 2023.
The CBN also tasked banks with the duty of recouping loans that were previously approved under the program. The SMEDAN director addressed the persistent defaults, stating that the loans are not for “beer” and should be repaid when they are due.
“The information on the disbursement is really clear, first and foremost. It’s not a grant; it’s a loan,” Odii declared. It isn’t money that you get for free or that you use to purchase alcohol. This is the cash you’ll need to launch your company and attract large investors. We are disbursing with commercial banks on behalf of the agency.
In the past, if you come to us with pre-existing loans and we don’t know about them, we run the risk of disbursing the funds. Therefore, you must repay any existing loans before being approved for new ones. “The commercial bank won’t follow you around trying to collect money from you.
Before you receive the funds, the bank will implement all of the risk evaluations. This is mostly the cause of the low disbursement rate and the fact that many recipients have not received the payments. They have no idea how they will pay back and don’t believe they will.
“Since we are utilizing the bank’s system, they are posing essential queries about their operations, daily spending, and balance sheets. They can now advise us on the kind of amount they can obtain after taking a look at that.
We intervene to provide advising services to those who are unable to match the amount they are requesting since a lot of people are seeking N2.5 million or more, but their balance sheet shows otherwise.
Additionally, Odii stated that the organization would see to it that small enterprises’ ability to obtain funding and make repayments is strengthened.
