Thursday 28 December 2017


When Minister of State for Industry, Trade and Investment, Aisha Abubakar, promised the other day that the Federal Government would assist the Small and Medium Enterprises (SMEs) to have better access to finance, her statement would seem another empty vow given that millions of such businesses have had little or no support despite their being the bedrock of the economy and given the failure of various schemes and agencies meant to support them.

Only a dramatic policy shift can change the extant situation and give life to the SMEs. Nigeria’s wobbly economy actually can be revived and sustained by the small business, even at these most trying times with the appropriate policy framework and financing. The formal financial sector comprising commercial banks and other non-banking institutions like insurance companies, deposit takers and building societies have little or no place for SMEs in their credit lending scheme as the operators of SMEs can hardly meet the credit conditions set by these institutions.

Not even the proliferation of micro-finance banks (MFB) has solved this problem. There are about 920 micro-finance banks on record in Nigeria, established, principally, to make credit easily accessible for small and medium enterprises. Whereas the MFBs are supposed to advance credit to the poor on very affordable terms, the experience is that the banks seem to have even more stringent conditions than the commercial banks. This has led to disappointment for many entrepreneurs.

There is, indeed, little or no difference between the micro-credit institutions and the conventional banks as both often demand huge collateral security to qualify for credit. In fact, the repayment terms are sometimes even more flexible in the conventional banks than in the micro-credit banks. While the conventional banks could advance credit for at least one year tenor, the micro-credit banks require just as short as six months to repay any loan, a condition that can hardly be met by any small business owner.

Based on the foregoing, it would take a genuine effort by the states and the Federal Government to make funds easily available to small business enterprises. The inability of the SMEs to access credit facility is systemic and government requires strong policy shift to put a new order in place. It is reassuring that Hajiya Abubakar, who spoke at the “Simply Nigeria Fair” in Ikoyi, Lagos assured the SMEs operators that government would render the necessary support to boost their operations.

She acknowledged that Nigerians are doing amazing, exciting and inspiring things and that government wants them to do more. She therefore said government would encourage the regulatory agencies to accommodate the needs of SMEs, like giving them licences faster.

The small-scale businesses whose invaluable contributions to the economy are well known often find it extremely difficult to access credit to boost their productivity. Abubakar, however, was right when she said that “there are no waivers when it comes to loans because when you give money, you would want your money back.”

Yet, when the contributions of market women, hairdressers, barbers, vulcanizers, mechanics, tailors and a host of other similar artisans at the grassroots level of the economy are considered, their relevance is not in doubt and they constitute the invisible hands that can boost the economy.

That being the case, it is up to the government to create other windows through which these entrepreneurs can access funds. One of such is through the Development Bank of Nigeria. The other is the Bank of Industry, which has different platforms through which SMEs can access loans and it is doing well in that regard.

Besides, there is the need for an indigenous strategy similar to the Grameen bank developed by Muhammad Yunus in Bangladesh, through which the poorest people are able to access micro-credit facility to boost their businesses. The defunct People’s Bank was set up for this purpose and it may therefore be time to try it again with better focus and operation.

There are also self-help savings and credit groups, which have been an important feature in small-scale businesses for economic development in Nigeria. The bottom line is that for Nigeria to develop, small scale businesses must be helped. In all, government should do more by making the operational environment for SMEs easier. The various agencies that are involved should be made to function in a more coordinated and robust manner.

Having a one-stop office complex where micro-businesses could do all their registrations without having to move from one place to the other is also a strategy that should be considered. (Guardian)

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