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CBN advocates more financing for medium, small business

By BusinessNews Staff on April 3, 2015

Nigeria’s apex bank, the Central Bank of Nigeria (CBN) has reiterated the strategic importance of the Micro, Small and Medium Enterprise (MSME) to the growth of the nation’s economy, saying they needed more funding. This was stated at the 3-day workshop on the N220 billion Micro, Small & Medium Enterprise Development Fund organised by the Bankers’ Committee’s sub-committee on Economic Development, Sustainability & Gender in collaboration with the CBN in line with the vision of the Governor of the Central Bank, Mr. Godwin Emefiele to promote financing to the MSME sector.

According to the apex bank, MSMEs are the engine room for economic growth, vehicle for job creation, tools for poverty alleviation and wealth creation for any country’s economy. In his welcome presentation, the Director, Development Finance Department of the CBN, Dr. Mudashiru Olaitan, represented by the Assistant Director, MSME Development Fund, Mr. Tobin Jonathan, said the workshop was organised to cross-fertilise ideas and bridge the knowledge about the MSME sector by the lending institution and to also correct the wrong perception of the risky nature of the sector.

According to him, “The rejection rate of MSME application by commercial banks is very high. We are aware this is necessitated by the banks’ aversion to risk due to lack of entrepreneurial skills and poor governance structures of most MSMEs, hence the need for the workshop to enlighten the bankers and encourage them more on the need to partner with us on the need to grow the sector.”

In his own presentation titled “Collateral Registry and MSME Financing”, the Project Manager of the International Finance Corporation (IFC), Ubong Awah said, IFC is collaborating with CBN to establish a National Collateral Registry to stabilise MSME financing and also boost the confidence of Nigerian banks in playing active roles in financing the sector in Nigeria. According to him, the MSME sector is an important catalyst for economic growth and financing the sector needs serious attention.

“As an organisation, IFC is bringing the experience we have garnered over the years across geographies to bridge the knowledge gaps and to lay emphasis on the fact that globally, collateral for MSME is moving away from fixed assets to movable assets, hence the need to establish a collateral registry for the financial industry. We are excited to partner with Central Bank on this initiative”, Awah said.

On the essence of the work shop, the Assistant Director, Development Finance department of the apex bank, Mrs. Amina Umar said since the N220 billion MSME intervention fund was launched in 2014 the uptake by the Deposit Money Banks had not been encouraging.

“There is then the need to interact with SME officers of banks to understand the banks’ challenges in MSME financing,” she said. According to her, it is the hope of the central bank, that with this workshop more than 50 per cent of the fund would have been accessed by the end of 2015 in compliance with the target set by the Bankers’ Committee and driven by the Economic Development, Sustainability and Gender chaired by Mrs. Bola Adesola (Managing Director, Standard Chartered Bank).

Mrs. Umar was of the opinion that at the end of the workshop, banks would increase awareness about the intervention fund, build capacity within the sector, develop innovative MSME financing products and also take advantage of the over 17 million MSMEs within the sector.

[ThisDay]

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