Why We Closed NERFUND – FG
The Permanent Secretary, Federal Ministry of Finance, Mahmoud Isa-Dutse, said the closure of the National Economic Reconstruction Fund was based on the recommendations of the Nigeria Deposit Insurance Corporation and the Central Bank of Nigeria’s special examination report of September 30, 2013.
In an Interview with the News Agency of Nigeria in Abuja on Sunday, the Permanent Secretary said the closure was in the best interest of the country.
Isa-Dutse said the government took the decision to close the office because it was too expensive to run it for recovery purposes only.
He said: “No local or foreign bank would lend money to them because their balance sheet was so bad and they still had to pay salaries and overheads.
“So when government decided to wind up the company, one of the things we did was to cut on the number of staff.
“So we gave them a very generous voluntary exit package to keep industrial peace.
“Many of them, six contract staff and 33 senior management staff who had spent many years there, took advantage of the offer and voluntarily resigned, collected their benefit and left.
“But the younger ones, of average age of 35 years, stayed back and continued the recovery effort and as of the date of closure, we had 49 staff left.
“You see NERFUND was an intervention agency and not a regular or permanent one like the Central Bank, NDIC or the core civil service.
“Under their terms of service, government is not obliged to transfer them to other ministries like in the civil service where you are basically guaranteed employment till retirement.”
However, Isa-Dutse said he had written to the Head of Civil Service of the Federation, Winifred Oyo-Ita, in October 2017 to appraise her of the development and solicit her intervention with the remaining staff.
He said: “We also contacted the office of the Vice President where they have the social intervention programmes, in case they require the skills of these people.
“But it’s not a guarantee that they will be employed.”
He said it was unfortunate that people misunderstood the closing down of the fund as government no longer cared about Micro Small and Medium Enterprises .
Isa-Dutse said: “Government, especially the current administration, is very concerned about diversifying the economy as contained in the ERGP.
“There is emphasis in the diversification of the economy and the promotion of MSMEs.
“Government has decided that NERFUND has to go because it has failed and there is BOI, CBN, DBN with bigger and better managed funds for intervention to MSMEs.”
Isa-Dutse also the Chairman, NERFUND’s Interim Management Committee said in 2001 that the Ahmed Joda Committee and the Stephen Oronsaye’s 2014 Presidential Committee on the Restructuring and Rationalisation of Federal Government Agencies had also recommended the closure of the Fund.
He noted that the BOI last year took over NERFUND, but only agreed to do so on a temporary basis to manage and wind up.
“Initially we wanted to merge NERFUND with BOI but BOI had their own objections,” he said.
He said that BOI rejected the offer of taking over the fund because of the bad balance sheets among other issues.
Isa-Dutse said the government would not just write off the bad loans of the Fund, which was currently in excess of N17 billion.
He said that BOI had been commissioned to take over the fund recoveries since it had within the small period it managed the fund recovered N500 million.
The Permanent Secretary said since the fund had been closed, the next step was to ensure that the National Assembly repeals the law establishing it.
Isa-Dutse said: “The request for the abrogation was placed before the National Assembly years ago.
“So what we will do is follow up and then explain to the National Assembly members so that they understand why government has taken this decision.”
NERFUND was set up in 1989 after the failure of the Structural Adjustment Programme, to provide medium to long time financing to viable Micro Small and Medium Enterprises in agriculture and agro-allied sectors of the economy.
The Fund commenced its operations in 1989 with N328.5 million paid-up share capital subscribed by the Federal Ministry of Finance with 67.83 per cent and the Central Bank of Nigeria with 32.12 per cent.
The Ministry of Finance also negotiated a 25-year African Development Bank loan of $144.2 million in 1992 and also provided additional loan of N300 million as working capital support in 2015.
However, the agency had been in comatose since late 2013, losing its capacity to carry out its mandate due to bad management and mismanagement of funds to the tune of N17.9 billion.