THE federal government announced yesterday that it will examine the criteria the Nigerian development banks uses to award loans to Medium and Small-Scale Enterprises (MSMEs) in order to ensure regional distribution.
The Minister of Finance, Budget, and National Planning, Zainab Ahmed, revealed this, when she testified before the Senate ad hoc committee who were looking into the alleged uneven disbursement of the N500 billion loans granted out to the MSMEs by Development Bank of Nigeria (DBN).
The ad hoc panel was established by the Senate on the motion of Senator Ali Ndume to look into the claim that the South West, particularly Lagos State, had the highest number of loan beneficiaries.
The chief executive officers of the impacted banks, including the Development Bank of Nigeria and the Bank of Industry, had informed the panel that while making loan decisions, they scrupulously followed the standards established by their authorities and did not take geopolitical factors into account.
Committee members, particularly those from the North, however disagreed with the comments made by the chief executives of the banks and insisted on a review of the criteria emphasizing that the development banks were established to ensure the equal distribution of wealth across the nation.
The finance minister told the lawmakers that she would meet with the development banks’ management and their regulators – the Central Bank of Nigeria – to carry out the review of the criteria for loan disbursement.
Ahmed however, assured that the assessment would be conducted in a way that would guarantee the sustainability of the development banks.
The minister said, “If the 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, the regulator, which is the CBN, will meet to review the criteria so that we could strike a balance that will enable the banks to do more where development is needed.”
