Rampant collapse of MFBs, access to finance killing MSMEs in Nigeria—Omoregie
Rising from a one-day roundtable discussion powered by the leadership of Young CEO Initiative and other young entrepreneurs in Nigeria held in Lagos, participants have decried the incessant collapse of Micro Finance Banks (MFBs) in Nigeria and the observed hostile access to funding for operators of Micro, Small and Medium Enterprises (MSMEs) as key challenges holding back their performance.
In his submission, the Founder, Young CEO Initiative, Aigbe Omoregie, explained that the role of MSMEs in the economic development of Nigeria cannot be over emphasised, but decried the drawbacks posed by paucity of funding and access for the segment.
According to him, Small and medium scale (SME) occupy a strategic position in every emerging economy as their roles are very significant in the development of a nation especially in contributing to the nation’s Gross Domestic Product (GDP), employment creation, export, increased value addition and technology advancement.
He recalled that few weeks ago, the Central Bank of Nigeria (CBN) announced the collapse of about 158 MFBs and 22 Finance Houses and a number of Mortgage Finance Banks which are known in driving the access to business capital for small business operators as the commercial banks are more interested in the affairs of blue chip businesses who seek high-end financing to do their businesses.
Explaining more, Omoregie revealed that MSMEs contribute 54 per cent to Nigeria’s GDP and 7.27 per cent to export as at 2013, pointing out Nigeria Bureau of Statistics (NBS) as at 2014 recorded the total number of persons employed by the sector was 59 million which represents 84.02 per cent of the Nigeria total labour force.
While acknowledging the efforts of the federal government in job creation, implementing programs and policies targeted towards the youths to encourage entrepreneurship, the Founder, Young CEO Initiative appealed to the government “with a sense of urgency to come to our aid as we are having real problems with accessing finance and this has resulted to the closure of many of our various companies and organizations”.
“This would only defeat our efforts in reducing the level of unemployment in the country.
“We find it difficult accessing credit facilities from commercial banks which leave us at the mercy of smaller financial homes who give us facilities at a very ridiculous interest rate that eventually eliminate the purpose of growth. In 2014, according to PwC, only 11 per cent of firms have access to commercial bank loans. Not only is access to credit facilities limited, but the terms and conditions attached to it is often impossible and interest rate is usually unreasonably high.”
In his further submission, Omoregie sought the assistance of development finance institutions such as Bank of Industry (BoI), Bank of Agriculture (BOA), Development Bank of Nigeria (DBN) to simplify the process of getting credit facilities for entrepreneurs to thrive.
He averred that “We do understand that we need to collaterise our facilities, but we also believe that the requirements can be more flexible to enable easy accessibility”.
