ABUJA (Office of the Vice President Report) “In a bid to help Micro, Small and Medium Scale Enterprises overcome the problem of access to low – cost financing, the Federal Government will encourage making well – planned concessionary funding initiatives available to them,” President Muhammadu Buhari said this in a speech delivered on his behalf by Vice President Yemi Osinbajo at the SME Financing Conference held in Abuja on Wednesday September 9, 2015.
The Nigerian President noted that the SME Financing Conference with the theme: “Bridging the Nigerian SME Funding Gap” convened by the Kaduna State Chapter of the Nigerian-American Chamber of Commerce and the Economic Affairs Section of the United States Embassy will assist in ensuring that credit reaches the larger population through working with cooperatives and trade organizations.
Muhammadu Buhari inferred that Government is resolved to engage more with Small and Medium Scale Entrepreneurs in Nigeria towards ensuring sustainable economic development and wealth creation in the country. Adding, SMEs are grossly under served in terms of low – cost financing and there are several reasons why this may be so, such as how to deal with the sheer scale of numbers of SMEs that need to access concessionary funds, in order to make appreciable impacts.
He intensified that the importance of financing SMEs has never been lost on the governments, but for lack of access to affordable loans, noting that several deliberate and sustained financial initiatives have been put in place by the Central Bank of Nigeria except that SMEs still remain grossly under served. He listed co-operatives, market women, trade groups, artisans and start-up companies as veritable partners engaged towards the creation of wealth with the overall goal of boosting job creation and ultimately economic growth and development.
“This would be the main focus of our engagement with the SME sector. We believe that working through the co-operatives, market women as well as trade organizations, credit can reach the larger population,” he said. He pointed out that the Central Bank had in 2003 put in place an Entrepreneurship Funding Initiative where banks set aside ten percent of their annual profits before tax for equity investment schemes in SMEs.
The Nigerian President further disclosed that in 2010, the CBN approved 500 billion naira debenture stocks issued by the Bank of Industry (BO1) out of which 200 billion naira was set aside for re-financing and re-structuring of banks’ existing portfolios to the Nigerian SME manufacturing sector. He stated that the CBN offered the debenture stocks at a seven percent interest rate, all in a bid to ensure that funding challenges militating against their growth and development are frontally addressed.
“In 2013, the CBN launched MSME Development Funds with the broad objective of channelling low interest funds to the MSME sub-sector by providing facilities to qualified and eligible participating financial institutions for lending to SME,” the President said.
Muhammadu Buhari remarked that the administration will continue to put in place innovative policies and programmes towards ensuring that funds get to SMEs because they form the pivot of any meaningful growth and development in the industrial sector. He also said that the future of the economy and expansion of commerce actively depend on MSMEs., pointing out that innovative, continuous, focused and deliberate policies and regulatory engagements must be put in place to ensure that supporting SMEs is sustained and fruitful.
Speaking on why the SMEs have always been underserved, the President hinted that there are large numbers of SMEs that need access to concessionary funds, in order to make an appreciable impact.
“The significant part of the problem of scale is the poor mechanism of dissemination of information on the availability of financing. Most SMEs, who are usually capacity-constrained don’t know the existence of such funds and how to access them,” he observed.
He pledged his administration’s continued drive to provide social protection for Nigerians and to efficiently tackle the deficiency in infrastructure, especially power, roads and rail as these challenges are already being frontally addressed.
Buhari challenged the conference participants to come up with solutions that would enable SMEs in the rural areas to have access to funds and properly make the process of accessing these funds less cumbersome. He commended the deep commitment and collaboration of the United States Government with the Buhari administration, particularly the interest shown by President Barack Obama in creating strong partnerships between the two nations.
Earlier in his remarks, the US Assistant Secretary of State, Economic and Business Affairs, Charles Rivkin explained that whatever is good for SMEs in any countries is also good for everybody, including the huge population potential of Nigeria, SMEs remain the driver if adequate and easy-to-access funds are allocated to the sector.
In a goodwill message delivered at the conference, the Niger State Governor, Abubakar Bello described the conference as timely as it has inherent possibilities of building capacity for SMEs as well as the private sector towards improving accessibility to low-interest funding for the sector.
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