In a bid to help Micro, Small and Medium Scale Enterprises overcome the problem of access to low cost financing, the Federal Government will encourage making “well planned concessionary funding initiatives” available to them, according to President Muhammadu Buhari.
In a speech delivered on his behalf on Tuesday by Vice President Yemi Osinbajo (SAN), Buhari made clear the government’s resolve to engage more with Small and Medium Scale Entrepreneurs in Nigeria towards ensuring sustainable economic development and wealth creation in the country.
The Vice President said: “SMEs are grossly undeserved in terms of low cost financing. There are several reasons why this may be so. These include how to deal with the sheer scale of numbers of SMEs that need to access concessionary funds in order to make an appreciable impact.”
Osinbajo, who spoke in Abuja 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, promised that working through cooperatives and trade organizations, credit can reach the large numbers.
He said the importance of financing SMEs has never been lost on the governments, but for lack of access to affordable loans, adding that several deliberate and sustained financial initiatives have been put in place by the Central Bank of Nigeria except that SMEs still remain grossly undeserved.
He 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.
Osinbajo said: “This would be the main focus of our engagement with SME sector. We believe that working through the co-operatives, Market and Trade organizations, credit can reach the largest numbers.”
He pointed out that the CBN had in 2003 put in place an Entrepreneurship Funding initiative, where banks set aside 10 per cent of their annual profit before tax for equity investment schemes in SMEs.
The Vice President added that in 2010, the CBN approved N500 billion debentures stocks issued by the Bank of Industry, 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 per cent 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 channeling low interest funds to MSME sub-sector by providing facilities to qualified and eligible participating financial institutions for lending to SME,” the Vice President said.
Osinbajo remarked that the administration will continue to put in place innovative policies and programmes towards ensuring that funds get to SME because they form the fulcrum of any meaningful growth and development of the industrial sector saying the future of the economy and expansion of commerce actively depend on MSMEs.
He added that 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 underserved, the Vice President said there are large numbers of SMEs that need access to concessionary funds in order to make an appreciable impact.
He said: “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.”
Osinbajo 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 can 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.
Earlier, the US Assistant Secretary of State, Economic and Business Affairs, Ambassador Charles Rivkin, said when it is 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.
In a goodwill Message, the Niger State Governor, Abubakar Bello, described the conference as timely as it has inherent possibilities of building capacity for SMEs as well as the private sector towards improving accessibility to low-interest funding for the sector.