BREAKING NEWS, Business
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The federal government is planning to make concessionary loans available to many small and business enterprises in the country
| By Anayo Ezugwu | Sep 21, 2015 @ 01:00 GMT |
THE federal government is to tackle the problem of funding which hinder the growth of small and medium scale industries in the country. It is mapping out a well-planned concessionary funding initiatives for SMEs in a bid to help small and medium scale enterprises, SMEs, overcome the problem of access to low-cost financing,
Vice President Yemi Osinbajo stated this in a speech he delivered at the SME Financing Conference with the theme “Bridging the Nigerian SME Funding Gap” convened by the Nigerian-American Chamber of Commerce, Kaduna State chapter and the Economic Affairs Section of the United States Embassy. According to Osinbajo, the government’s resolve to engage more with small and medium scale entrepreneurs in the country is to ensure sustainable economic development and wealth creation.
SMEs are grossly under-served in terms of low cost financing. Several reasons account for this, including the problem of dealing with the sheer scale of numbers of SMEs that need to access concessionary funds to make an appreciable impact. But Osinbajo assured that working through cooperatives and trade organisations, credit could reach a large number of them.
According to him, the importance of financing SMEs has never been lost on the governments but for lack of access to affordable loans, That is why the government hd put in place several deliberate and sustained financial initiatives through the Central Bank of Nigeria except that SMEs still remain grossly undeserved.
Osinbajo listed co-operatives, market-women and trade groups, artisans, start-up companies as veritable partners who are being engaged towards the creation of wealth with overall goal of boosting job creation and ultimately economic growth and development. “This would be the main focus of our engagement with SME sector. We believe that working through the co-operatives, market and trade organisations, credit can reach the largest numbers,” he said.
The Central Bank of Nigeria, CBN, had in 2003 put in place entrepreneurship funding initiative where banks set aside 10 percent of their annual profit before tax for equity investment schemes in SMEs. In 2010, CBN approved N500 billion debentures stocks issued by the Bank of Industry, BoI, out of which N200 billion was set aside for re-financing and re-structuring of banks existing portfolios’ to Nigerian SME manufacturing sector, offered at a seven percent interest rate, all in a bid to ensure that funding challenges militating against their growth and development are frontally addressed.
In 2013, CBN again launched MSME Development Funds with the broad objective of channelling low interest funds to MSME sub-sector by providing facilities to qualified and eligible participating financial institutions to lend to SME.
The federal government led by President Muhammadu Buhari will continue to put in place innovative policies and programmes towards ensuring that funds get to the SMEs because they form the fulcrum of any meaningful growth and development of the industrial sector, Osinbajo said. This is necessary because the future of the economy and expansion of commerce actively depend on SMEs. That is why innovative, continuous, focused and deliberate policies and regulatory engagements must be put in place to ensure that supporting SMEs is sustained and fruitful.
On why the SMEs have always being under-served, the Vice President said there were large numbers of SMEs that need access to concessionary funds in order to make an appreciable impact. “The significant part of the problem of scale is the poor mechanism of dissemination of information of the availability of financing. Most SMEs being usually capacity-constrained don’t know the existence of such funds and how to access them.”
He then pledged the Buhari administration’s continued drive to provide social protection for Nigerians and to efficiently tackle the deficiency in infrastructure especially power, roads and rail as these challenges are already being frontally addressed. The vice president, however, challenged conference participants to come up with solutions so that SMEs in the rural areas could have access to funds and how best to make the process of accessing these funds less cumbersome.
He commended the deep commitment and collaboration of the United States Government with the Buhari administration, especially the interest shown by President Barack Obama in creating strong partnership between the two nations.
In his address, Charles Rivkin, US assistant secretary of state, Economic and Business Affairs, said “when it’s good for SMEs in any country, it is good for everybody and with the huge population potentials of Nigeria, SMEs remain the driver if adequate and easy-to-access funds are allocated to the sector.”
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Tags: artisans Bank of Industry BOI CBN Central Bank of Nigeria Charles Rivkin concessionary funding loans low-cost financing President Barack Obama President Muhammadu Buhari small and medium SME Financing Conference SMEs start-up companies trade groups Vice-President Yemi Osinbajo
