House C’ttee Opposes Moves to Scrap NERFUND 

*Summons past MDs to account for stewardship

 By James Emejo in Abuja 

The House of Representatives Ad-hoc Committee investigating the federally owned Development Finance Institutions (DFIs) in the country has opposed the executive order by the presidency to wind down the National Economic Reconstruction Fund (NERFUND).

Chairman of the committee, Hon. Emeka Anohu (Anambra, PDP), at a briefing  said in spite of the challenges confronting the Fund, investigations so far carried out revealed that scrapping the agency was not a permanent solution.

Noting that the scrapping could have adverse effects on the already high unemployment rate in the country, he said all NERFUND needed was a restructuring of its management and implementing new models to tackle the needs of the people who require these funds.

He added that as part of efforts to assist NERFUND recover its bad loans, all former managing directors, substantive or in acting capacity would be invited to account for their stewardship during the period under probe.

Also, he said the committee would invite to a public hearing customers who obtained the bad loans and had refused to pay.

He said: “Our investigations have revealed that the agency set up for a lofty purpose of providing funds for the MSMEs which remains highly unachieved.

“MSMEs still require cheap funding from government which can be better provided through agencies like NERFUND.

“But the failure of NERFUND like other agencies was due to poor management over the years including diversion of funds,  poor business models which could not support its operations.

“In spite of the challenges, shutting down NERFUND is not the solution as revealed by the investigations we’ve carried out. The agency should be reorganised and positioned to discharge its mandate to the economy.”

NERFUND was set up in 1999 by an Act of Parliament with the mandate to provide funds for micro small and medium scale enterprises (MSMEs) and large enterprises.

But its statutory role had been hampered by huge non-performing loan portfolio that has crippled the fund.

Several recovery efforts had since been initiated including involvement of the Economic and Financial Crimes Commission (EFCC) to track big debtors.

The acting Managing Director of NERFUND, Mr.  Ezekiel Oseni recently said that the fund was unable to pay staff salaries while majority of the staff had been laid off owing to the N17.5 billion owed it by recalcitrant debtors.
He therefore appealed to the EFCC to help recover the outstanding amount.

According to him, eight percent of the total customers, who borrowed money accounted for over 81 percent of total non-performing loans

Oseni said since he assumed office in August last year, he had engaged with 135 customer, who borrowed between N1million to N5million and had been making efforts to repay.