Delta State introduces N1 billion SME business loan scheme

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Saturday, June 8, 2000 SEARCH NIGERIAWORLD Match All TermsAny Term    Forwarded by: David Edevbie  Commissioner for Finance & Economic Planning,  Delta State  [email protected]

PRESS RELEASE The Delta State Government is set to introduce a scheme designed to assist small and medium scale enterprises in the State to obtain loan finance from commercial banks at interest rates significantly lower than what is currently obtainable. As part of the overall strategy of the Ibori administration to tackle unemployment, youth restiveness, and widespread poverty, the first phase of the scheme will entail the provision of N1 billion of loan finance to small and medium scale enterprises operating in the State. It is estimated that this scheme will lead to the creation of up to 3000 new jobs which will not only raise the State's total output of goods and services but will boost internally generated revenue. The Delta State Honourable Commissioner for Finance and Economic Planning, Mr. David Edevbie announced today in Asaba that four major banks will be participate in the scheme. The banks include Oceanic Bank International, Zenith Bank, Standard Trust Bank and Societe Generale Bank. With the approval of the scheme by the State Executive Council at its meeting held on June 29, Mr Edevbie stated that the full details of the scheme would be unfolded shortly. According to the Finance Commissioner, this is yet another in a series of well articulated programmes involving the active collaboration of the Delta State Government and the private sector, to exploit the strengths of both parties for the benefit of the teeming population of Deltans. His Excellency, Governor James Onanefe Ibori, will launch the scheme, which the Commissioner described as a "unique and ingenious poverty alleviation package" at a date to be announced shortly. Shedding more light on the state backed credit scheme, Mr. Edevbie stressed that "it is very much unlike the CBN proposed SME funding scheme which requires banks to compulsorily invest 10 per cent of their pre-tax profit in the equity capital of SMEs. Edevbie indicated that he was somewhat bemused by the new CBN policy for two reasons: Firstly, he noted that it was quite obvious that most commercial banks currently lack the necessary expertise to manage such portfolios". He noted that Nigerian commercial bank's expertise lay in granting loans and not equity financing which in his opinion requires a different set of skills. Secondly, he noted that with the best intentions in the world, it was unlikely that commercial banks would lend to relatively high risk SMEs in the current climate without government support. He urged the CBN to critically re-examine the new policy as it could be a recipe for financial disaster. He advised CBN to await the unfolding of the Delta State scheme which he said will be a model in the country. Mr. Edevbie emphasized that the Delta State Government-backed loan scheme is designed for already existing SMEs. He therefore advised SMEs in Delta State intending to benefit from the scheme to begin updating their accounting records, strengthening their management teams and preparing their business plans ahead of the planned launching of the scheme. On plans for start-up businesses, the Commissioner stated that the State Government is working on a programme, which will entail the creation of a venture capital company that will be empowered to focus specifically on their unique needs for equity financing. Delta State Nigeria

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