The National Financing Agency of Nigeria (CFAN) has said that subscription to the newly launched Cooperative Development Fund (CDF) will guarantee cooperatives access to long-term investment finance at affordable rates.
Executive Secretary of CFAN, Mr Emmanuel Agama, told the News Agency of Nigeria (NAN) in Abuja on Tuesday that the fund, which has commenced operations, will provide loans to cooperators at a single-digit interest rate of five per cent.
According to him, CFAN has partnered with Sterling Capital as fund manager to warehouse the CDF, with no fewer than 25 cooperative societies already subscribed.
Agama explained that the initiative was designed to strengthen cooperative societies by creating a sustainable pool of capital, reducing their overreliance on commercial banks.
“Most attempts by cooperatives to access external funding have led them to banks, whose lending terms do not support the cooperative model of affordable access to finance. The CDF is to be subscribed to by cooperatives through their contributions, thereby creating a financial base they can fall back on at any time,” he said.
He noted that many cooperatives currently lack investment reserves, disbursing all inflows as member loans, leaving them vulnerable during crises. The CDF, he said, would provide secondary funding to cushion such situations.
Agama added that the fund could also serve as a guarantor for subscribers seeking housing finance from the Federal Mortgage Bank.
“Within the money market today, banks are lending at between 28 and 34 per cent. Cooperatives are not finding it easy because they are still lending at single digits. The CDF will now be the only means to sustain that single-digit lending, and the ease of access cannot be compared to what exists in the conventional money market,” he said.
He urged cooperative societies yet to subscribe to take advantage of the fund for long-term sustainability, improved member welfare, and greater business impact.
