The Central Bank of Nigeria (CBN) at the weekend said the Bank of Industry (BoI), has so far disbursed N111 billion through 17 banks to fund 305 Manufacturers and small and medium scale enterprises (SME) projects across the country, from the N130 billion released a fortnight ago.

Speaking at the official launch of “the 2010 Nigerian Banking Sector Report,” published by Afrinvest West Africa Limited in Lagos, Sanusi Lamido Sanusi, the CBN Governor, noted in his keynote address titled: “Reforming towards Lending to the Real Sector.”

noted that the fund, which is in collaboration with the Bankers’ Committee, “will help change the face of the SME and manufacturing sectors.

Represented by Joe Alegieuno, Director, Director, Development Finance Institutions Department, explained that the loan is at an interest rate (all inclusive) of 7.0 per cent to the end users by the banks, who themselves access the fund at 1.0 per cent from the BoI. Before the funds were released, according to him, there were already 305 projects for which the promoters applied.

The CBN, Alegieuno added, has done a lot to ensure that funds flow from the banks to the real sector, quoting Sanusi as saying that the ongoing reforms is driven by the fact that the future of the banking industry depends, to a large extent, on the real sector. This, he continued, is the reason for the focus on funding the power sector, a key driver of growth for other sectors of the economy.

Already, the guideline for intervention in the power sector has so far being concluded and is awaiting bankable project proposals through the various banks. The guideline will however be reviewed and approved first by the Committee of Governors of the CBN, which is expected to meet this week before it is published.

So far, he continued, the apex bank through its intervention in the agricultural projects, another key driver of economic growth and development, has as at July this year released N70.4 billion through 10 banks to fund 68 projects in the sector.

The apex bank however warned banks to use the funds for the projects for which they have been approved, promising severe sanction for misapplication of any kind. Any bank caught, he stressed, will loss much more than the gains envisaged from such funds misapplication on the long-run.

“The CBN will monitor the banks closely and will not let them keep the funds in their vaults or lend to others. Any bank that misapplies the funds will be penalized severely. The thinking that the funds will be given to others will not happen, because they may loss more than twice what they expected to gain from the deal,” he stressed.

Also contributing at the forum, Mrs. Sola Ayodele, chief executive of Spring Bank praised the CBN’s efforts, explaining that the banks applied for the funds on behalf of their clients and will therefore go to them, since the banks are only channels.

She noted that there is still a balance of N19 billion from the fund, which is still being processed for disbursement to beneficiaries

The CBN, he continued, is already looking at a new programme that will be demand driven and an intensive risk sharing scheme, while also ensuring incentives for banks, insurance and capacity building. The programme, he added, is billed to significantly change the face of the nation’s agricultural sector.

Ayodele also lauded the rescue efforts in the banking industry, which has brought the sector back to life, describing it as the best thing that has happened (to the industry and without which) you and I would have just walked to any bank one day and would not get a dime,” she said, lauding the CBN focus on sectors like power, agric and transportation. She lamented the current power output of 25 per cent, while commending the current era of transparency and full disclosure among banks made possible by the apex bank.

Despite all that has happened to them, Chris Newson, managing director and chief executive of Stanbic IBTC Bank, urged stakeholders to encourage banks to take responsible lending risks. The only thing the market does not need as this time, he cautioned, is a bubble, adding that the industry can yet do with a lot of consistency and trust, which should also be encouraged to thrive, calling for optimism about the future of the nation’s economy.