The
AGSMEIS is the product of an agreement by member-banks of the Bankers Committee
to set aside 5% of their annual post-tax profit to assist in making funds
available to SMEs, either as equity (interest-free) or loan, at single digit
interest rate.
Many
factors make disbursement of the fund commendable, if properly implemented. The
first is that the scheme will make available and accessible cheap funds to
small businesses thereby filling the gap that has been a serious source of
lamentation by such target businesses.
According
to reports, the Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, stated that small
loans like N100,000, N200,000 and N500,000 at not more that 5% would be
disbursed. The amount will make it possible for the credit facility to be
accessed by many small businesses. Second, the target businesses, according to
Emefiele, will include, among others, those in tiling, masonry and house
decoration. Such neighbourhood businesses have potentials for creating
jobs/employments and even opportunities for apprenticeship/internship. They
will therefore impact positively on the labour market.
Three,
there is said to be a provision in the scheme for the training of beneficiaries
of the fund on how to manage their businesses on daily basis. The enterprises
will benefit from better management, with chances of survival and growth.
Four,
given that the tenor of the loans under the scheme is said to be within seven
years with a moratorium, the entrepreneurs will have enough time to
productively utilise the money before final repayment becomes due. Consequently,
the entrepreneurs will not be under pressure to repay the borrowed funds.
Indeed,
the chances of repayment, with little or no defaults, will be increased. Also,
since the scheme aims at increasing the number of small businesses operating in
the country and generating about 100,000 jobs within the first quarter of this
year, early commencement of fund disbursement will assist in the realisation of
this critical objective. Finally, training loan beneficiaries and providing
them with equipment in addition to working capital will be a tremendous
empowerment for positive results.
However,
for the scheme to be successful, multiple challenges exist that must be
overcome by the banks and the small businesses. A key challenge for banks is
their level of commitment to the scheme. Will they, for instance, give as much
attention to applications/projects under this scheme that promises low or
uncertain returns as to those with high and probably assured returns? If such
serious attention is unlikely to be generated, then the fund will end up like
the previous ones that did not achieve the intended objectives.
A
second challenge is whether banks will be able to re-train themselves to
effectively manage small-scale credits? For example, there are significant
differences in the appraisal and administration of small and large-sized
credits. Deposit money banks in the country are more knowledgeable in large
credits than they are in small ones. Thus, to be able to make this scheme work,
banks would need to improve their small credit management skills and practices.
This
will require extensive training and re-training of the relevant personnel
irrespective of whether management of the scheme will be outsourced to a third
party. Going by the stated small size of the loans to be made available and the
idea of creating many small enterprises through the scheme, banks or their
scheme’s management agents are likely to be faced with numerous fund requests.
Are
they prepared to cope with this daunting task and would they invest in the
relevant technology to assist? If applications for the fund are delayed for
months, untimely death of the scheme will be heralded by loss of confidence.
Perhaps, the most important challenge to the banks is whether they learnt
lessons from similar schemes they previously engaged in but ended up being
unsustainable.
It is
not the commencement of fund disbursement that matters. What matters are
repayment/recovery of the funds when due and sustainability of the scheme to
ensure attainment of its growth and developmental objectives in the economy.
For
the small businesses, the real challenge is discipline or diligent management
of the credits. Many of the entrepreneurs have often complained of inability to
access cheap funds to power their businesses. Now that such fund has been made
available and hopefully, accessible, it behooves on them to make the best use
of this opportunity. This is time to build the credibility necessary for future
businesses.
Finally,
if banks and the small business entrepreneurs can play their parts diligently,
transparently and responsibly, achieving the lofty objectives of the scheme is
guaranteed. And that is what the Nigerian economy requires and deserves for the
well-being of the citizenry. (Guardian)
Have you heard this? Many Nigerian exporters have been
defrauded of huge amount of money in the process of exporting commodities to
foreign countries. Do you know why? They were not trained on export operations,
management, documentations and the best methods of payment in export trade.
This is terrible!!! Nigerians cannot continue to lose money to foreigners in
the course of export business. Exporters, why don’t you get a practical manual
that teaches the stages of export trade from processing and packaging of commodities
to receipt of payment by the foreign buyers. It teaches export operations,
export management, export documentations and methods of payment in export
trade? It is a contemporary step-by-step guide to export trade. It tells all
the contemporary dynamics in export trade. To get it, click on the link below:
Hmmm!!! Folks, have you ever imagined how the
financial status of your firm will be when more than 20,000 CEOs and other key
decision makers of blue-chip corporations pay for your products and services or
even give you very juicy deals. The link below will tell you more: http://www.tectono-business.com/2015/07/tectono-business-review-in-conjunction_21.html
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