Don't Miss


Home   >   Business   >   Industries   >   Banking   >   CBN puts MSME financing gap at N9.6tn

CBN puts MSME financing gap at N9.6tn

By on September 4, 2015

The Central Bank of Nigeria has put the funding gap for the Micro, Small and Medium Enterprises sector at N9.6tn.

The Assistant Director, Development Finance Department, Mr. Jonathan Tobin, gave the figure while speaking at the MSME development fund workshop organised by the Bankers Committee in Abuja.

He said based on the funding needs of the sector, the amount would assist the MSMEs to create jobs and contribute significantly to the Gross Domestic Product of the economy.

Tobin lamented that if banks had played their roles effectively in lending to the sector, the huge funding gap would have been reduced drastically.

According to him, banks lending to the sector has been declining since 2003, adding that lending from financial institutions to the sector is currently less than one per cent of total credit to the economy.

He said it was because of the risk-aversed nature of the banking sector that the apex bank introduced some of the intervention funds to boost the development of the MSMEs.

Some of these funds are the N220bn MSME fund, and the N200bn Agriculture Credit Guarantee Scheme.

He said, “Nigeria banks are aversed to taking risks. They like to play safe. The economy is virtually collapsing yet banks keep declaring huge profits.

“There are currently 17.3 million MSMEs in Nigeria, employing about 33 million people. Yet only 4.2 million of these have access to finance.

“Despite this, from 2002 till date, lending by Money Deposit Banks to the sector has reduced significantly. Now N9.6tn is needed to bridge the financing gap in the sector.”

Apart from funding, Tobin listed the challenges facing the MSME sector as lack of entrepreneurial skills by the MSME operators, adoption of ‘one size fits all products’ strategy for loans by banks and poor governance structure.

He said, “Banks and other lending institutions should offer tailor-made solutions to lending to the MSMEs instead of the current one-size-fits-all approach.

“Customised risk management lending method in place of collateral driven lending currently employed by banks should be developed.

“We strongly recommend that banks start lending from their balance sheet. There is also need for collaboration between CBN and other government agencies on the implementation of various initiatives geared towards de-risking the sector and making finance available to MSMEs.”

 

[Punch]