BY December this year, paper forms of some small denominations of naira would be in circulation in Nigeria. Tunde Lemo, deputy governor, operations, Central Bank of Nigeria, made the announcement on Friday October 11, 2013, while briefing newsmen at the annual meeting of the World Bank and the International Monetary Fund, in Washington, United States.
Lemo said smaller denominations such as N5, N10, N20 and N50 notes that are presently in polymer form will be changed to paper form. He added that the decision to change the the denominations into paper forms was taken last year but could not be implemented due to some challenges.
“The smaller denomination notes are being supplied by the printers and before December, you will no longer see tattered notes all over. I have apologised to Nigerians that the reason the old notes that are still in circulation was because of certain challenges that we faced. We initially planned to introduce N5,000 notes and convert these denominations into coins but when that plan was rejected, we had to go back to the drawing board and re-strategise. Lemo also disclosed that the new paper notes would retain all the features in the polymer notes that are presently in circulation.
“We will maintain the status quo ante; that is, they will reappear in the old form that they were except that they are going to be in paper not polymer.” He also said that since 2009, the spending on printing of currency had been on the decline. He attributed that to the efficiency in distribution of the currency and printing of more of the higher denomination notes. “We used to spend N13 printing N1000 notes, if we had succeeded in printing N5,000 notes, we would have spent only N18; that would have also reduced the cost of printing. That was the message we were trying to transmit to Nigerians.”
On the difference in the cost of printing in polymer and paper, he said that it was cheaper printing in polymer. “We would have spent less printing polymer because polymer substrate lasts four times longer than paper and it costs only 150 per cent more. Unfortunately, whereas the substrate lasts four times longer, the ink fades pretty faster and so what’s the use of the substrate whose ink has faded and that was partly why we disengaged from polymer.”
On the cashless policy, Lemo said there had been improvement in the use of electronic channels for money transactions in the country. He said that N11 billion transactions were made through mobile payment in September 2013, adding that more activities had been going on through the electronic channel unlike before.
Federal Government Intervention Fund for SMEs
THE federal government has provided N3 billion through the National Enterprise Development Programme for micro enterprises in all the states of the federation from January to September 2013. Olusegun Aganga, minister of industry, trade and investment, said the direct micro-enterprise funding further demonstrated the commitment of the President Goodluck Jonathan’s administration to develop enterprises at the grassroots in order to create jobs, enhance growth and ultimately reduce poverty.
He said the NEDEP provided the necessary platform for sustainable ongoing funding of the micro enterprises, adding that the programme, through the Small and Medium Enterprises Development Agency of Nigeria’s business development training, also ensured the financial readiness of the micro enterprises and their ability to repay the disbursed loans.
Micro enterprises are businesses with less than 10 employees and or less than N5m in assets (excluding land and buildings). They currently represent 99.87 percent of Nigeria’s MSME population. According to the minister, the NEDEP is an initiative spearheaded by the federal ministry of industry, trade and investment and its three parastatals, the Bank of Industry, SMEDAN and the Industrial Training Fund.
“The federal government is deepening its interventions at the grassroots by implementing new initiatives in each state and local government of the federation. Over the last three months, SMEDAN has expanded its operational footprint and the agency is now present in every state of the federation, a remarkable feat within such a short period. This will enable it to provide the necessary support in an efficient manner in the different states. Nigeria has over 17 million MSMEs, according to a survey carried out by SMEDAN in collaboration with the National Bureau of Statistics, and employs over 32 million people. Most Nigerians are employed in this sector and future job growth in Nigeria, like in most developed countries, is expected to come from this sector,” he said.
Why Most SME’s Fail
OVER 80 percent of the Small and Medium Enterprises, SMEs, in Nigeria fail within the first five years of their existence due to lack of experience and other wrong business practices. Ugochukwu Chris-Aladum, Stanbic IBTC, Lawanson branch manager, stated this at a bi-monthly business networking event for young entrepreneurs and business professionals, organised by BizKonects Mega Corporate Limited, in Lagos.
He attributed the inability of SMEs to access finance from banks and other financial institutions to lack of proper structures. According to him, there are certain requirements that must be met before young business owners could enjoy bank finance including; bank statement and proper record of the company’s activities. These, he said, would determine if the bank would be able to help.
“Banks are also business enterprises and are in business to make profit too. So, there is no way you can prove you operate a business without a bank statement which most businesses lack. Also, before you can seek and get bank funds, you must have run the business for about six months with your personal money. Security is one other thing needed and you should have a market for the service you tend to provide. Though, SMEs are the largest employers of labour, insufficient capital, improper inventory record, poor management practices and lack of adequate financial records are factors that mar their access to finance,” he said.
Victor Bisong, head, corporate finance, Cowry Asset Management Limited, who also spoke at the event, noted that in spite of the fact that the environment for doing business in the country is very difficult, the company has continued to support small businesses in two ways, debt financing and equity funding. He urged operators of small businesses to run their outfit for a while before approaching the company for advisory, linkage and funding service.
Compiled by Anayo Ezugwu and Vincent Nzemeke
– Oct. 28, 2013 @ 01:00 GMT