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“Don’t blame banks for poor lending to SMEs” – Sanusi

By on December 12, 2013

The Governor, Central Bank of Nigeria, Mr. Lamido Sanusi, has said that the harsh operating environment in which banks conduct their business is currently hampering the flow of credit to the Small and Medium Scale Enterprises sector.

Sanusi spoke at the bank’s headquarters on Tuesday in Abuja during a forum organised under the theme: ‘Promoting global financial inclusion: Overcoming key barriers through public-private collaboration.’

The programme was held in collaboration with the World Economic Forum to discuss how to remove the impediments to the financial inclusion initiative of the CBN.

Sanusi while admitting that lack of access still remained one of the major challenges to financial inclusion, however, observed that it would be unfair to continue blaming the banks for not lending to the SMEs in a country with huge infrastructure problems.

The governor urged the government to address the key challenges facing the SMEs, adding that this would go a long way in reducing the cost of funds in the country.

He said, “The problem of access to credit is big for the SMEs and micro enterprises. Some people think it is the high rate of interest; of course, it is debatable, but I think it is far more fundamental.

“When you deal with credit in particular, it is got to sit within a broader ecosystem. We cannot continue blaming the banks for not lending to SMEs. We have got to say how much is the government spending on SMEs? How much investment is being done to create viable SMEs?

“They (SMEs) do not have electricity; they do not have infrastructure; they do not have security; maybe the tariff regime or incentive regime is not fair; it is difficult to do business under these circumstances.

“We cannot lend to them, but we need to see how to interface with the government so that we can see how we can solve this problem.”

Sanusi said the central bank had in the past made efforts to address some of the impediments to credit, adding that discussions were ongoing with the Ministry of Industry, Trade and Investment, and the Federal Ministry of Finance to have industrial clusters that would benefit from electricity and special economic zones.

He said, “We worked with the ministry, fixed value chains and  encouraged the banks to increase lending to agriculture from less than one per cent to four per cent in two, three years, and we will try to do that with the SMEs.”

 

 

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