By InvestAdvocate
Lagos (INVESTADVOCATE)-The Central Bank of Nigeria has resolved to tackle the N9.6 trillion financing gap in the Small and Medium Enterprises (SMEs) sub-sector of the economy.
Ibrahim Mu’azu, CBN’s director of Corporate Communications who disclosed this at the weekend, said disbursement of significant part of the N220 billion Micro Small and Medium Enterprises (MSMEs) instituted by the regulator remains part of its commitment to providing improved financing opportunities for small businesses.
He spoke at the 2015 Annual Conference organised by the Finance Correspondents Association of Nigeria (FICAN) in Lagos.
According to Mua’azu poor access to credit remains one of the biggest limitations faced by small businesses and has to be tackled collectively by stakeholders in the financial services sector.
He disclosed that 60 percent of the fund, representing N132 billion, has been earmarked for providing credit to women-owned businesses, hence giving financial backing to one of the most vulnerable segments of the society.
“The objective was to unlock the potential of small businesses through credit support and taking such enterprises to positions where they would be able to create jobs and reduce poverty among the citizenry,” the CBN director added.
Mu’azu affirmed a huge channel has been created for the administration of the loans through private or state owned microfinance institutions, finance houses, as well as commercial banks. He further affirmed that State governments are allowed to access up to N2 billion each for on lending to eligible beneficiaries through participating financial institutions in their respective states.
According to him, a maximum of 10 percent of the commercial component of the fund is being channeled to trading and commerce to ensure that productive sectors of the economy continue to attract more financing necessary for employment creation and diversification of the country’s economic base.
“The broad objective of the N220 billion MSMEs fund is to channel low interest fund through participating institutions, like banks and microfinance banks and state governments to small businesses that need it to create jobs and empower grassroots population,” he said. “The fund has reduced cost of borrowing and created better opportunities for beneficiaries to declare better results”.
Mu’azu noted that successfully accessing the fund will require prospective borrowers getting them acquainted with the drawn down procedures and providing the needed information that enable their banks consider the loan requests.
On his part, Femi Egbesola, the president, Association of Small Business Owners (ASBON) said the draw down criteria are unrealistic and are beyond the reach of small business owners.
Egbesola added that commercial banks authorised by the CBN to disburse the funds do not see SME operators as serous people that need such funds.
The ASBON president advised the Central Bank and commercial banks to rethink their SMEs’ funding strategy because of the huge benefits credit access by small businesses will add to the economy.
