MSMEs growth: Stakeholders want FG to provide credit guarantee

STAKEHOLDERS in the micro, small and medium enterprises (MSMEs) subsector have stated the need for Federal Government to provide credit guarantee for small businesses to facilitate their access to credit.

They also emphasised the need for government to deepen the capital markets in order to ease access to long term funding for on-lending to the SMEs in various sectors of the economy, deal with regulatory and governance issues, formalize businesses in the informal sector, free funds accrued into the contributory pension scheme and mandate relevant ministries and agencies to provide capacity support for SMEs.

Tony Opanachi, CEO/Managing Director of National Development Bank (NDB) who spoke at the second Plenary session on ‘Access to capital’, pledged the resolve of Bank towards addressing various challenges especially funding and risk related issues impeding the growth of MSMEs.

To achieve these, he disclosed that the Bank will provide long term credit to SMEs through financial banks/intermediaries, build the capacity of entrepreneurs as well as share partial credit guarantee in the bid to ensure a sustainable flow of credit to the SMEs segment of the market.

“If you want to run a sustainable business, you can’t run away from the micro environment that you have. And DBN is set to run a sustainable business. We are trying to avoid the mistakes of the past, where you come out with intervention funds they dry up, but there’s no sustainability. One of the key things DBN is doing differently to run a sustainable business over time.

“If you look at that segment, the micro for example, how are they being served in terms of debt-equity? Most of the microfinance institutions basically focus on micro and learn the act of lending to micro businesses.

They’ve perfected the interaction; they know the business to lend to them but they have major issue with funding.

They have capacity issues in terms of funding so while they have those customers, a lot of the people come in trying to get money through them but they don’t have the capacity.

According to the DBN helmsman, expressed optimism that the passage of the Movable Assets Act, will boost access to long term funding for MSMEs.

“If you are talking of collateral, where you can use movable assets to secure some of your lending, this was not there before. That Act has been passed into law.

So the operationalisation of that, most of all these small businesses they have little movable assets, they can use as collateral when it becomes necessary,” he stressed.

In his contribution, Chief Executive Officer of Helios Investment Partners, Kamoru Bakrim decried that the dearth of investable opportunities in Nigeria and Africa at large remains a great challenge to the continent.

Barkrim who expressed optimism on the development of SMEs, expressed concern over the dearth of investable opportunities in Africa.

On his own part, Founder Verdant Agritech Limited, Nasir Yammama, spoke of the need for data generation in order to boost access to noting that a lot of farmers are joining us along the value chain, despite the challenge of access to funding.

While calling for the intervention of NESG to attract more investors Yammama said most entrepreneurs get access to funding outside Nigeria while others generate funds personally.

“De-risking MSMES is key and the Nigeria Incentive Risk Sharing Agricultural Lending (NIRSAL) ‎is already taking the lead in addressing the risk concerns of farmers who make up the bulk of the 37 million MSMES sub-sector.

“For me, capacity development is key for entrepreneurs to be able to make headway. ‎ Entrepreneurs must invest in developing capacity.

Which would enable them to attract private capital and affordable funding,” Yammama said.