NESG holds session on MSME funding ahead of its 27th summit

The Nigerian Economic Summit Group (NESG) Micro, Small and Medium Enterprises (MSMEs) Community of Practice, in collaboration with the Federal Ministry of Finance, Budget and National Planning, has held a Pre- 27th Nigerian Economic Summit (#NES27) event with the theme “MSMEs Funding in Nigeria: Insights, Impact, Accountability”.

NESG Board member and Executive Director Kainos Edge Consulting Limited, Mrs Wonu Adetayo, in her welcome address, said the challenge of access to funding is one of the significant issues confronting Nigeria’s financial ecosystem.

She revealed that MSMEs have a financing gap of about N617.3 billion annually.

She said MSMEs accessed as little as 0.3 percent of total financing available to commercial banks even though they make up 50 percent of Nigeria’s economy.

Mrs Adetayo stated that MSMEs faced the challenge of access to finance, which has been exacerbated by the COVID-19 pandemic and that the NESG is working to address critical gaps by boosting capacity building, access to finance, access to markets and policy regulation through the NESG Community of Practice which focuses on strengthening ongoing conversations to understand better and identify opportunities and areas of improvement.

She stated that discussions will focus on identifying urgent recommendations to encourage accountability in all MSME funding programmes in the future and that sustained effort from the government and private sector can help the MSME sector become a major contributor to Nigeria’s economic development.

In his presentation, MD/CEO Abusi ventures and thematic lead Access to Finance group of the MSME Community of practice, Mr Akintunde Maberu, revealed that obtaining finance is the most pressing challenge faced by MSMEs.

He stated that small businesses are the bedrock of economic growth globally, mainly because they provide millions of jobs and are significant contributors to the Gross Domestic Products (GDP) of countries worldwide, with MSMEs contributing 50 percent of Nigeria’s GDP and much higher in other countries.

Mr. Maberu also revealed that Nigeria has about 40 million MSMEs that employ an estimated 80 percent of the country’s entire workforce.

He noted that the current administration had supported MSME through direct interventions, NIRSAL Microfinance bank, Bank of Agriculture and the Development Bank of Nigeria since the onset of the COVID-19 pandemic. However, Nigeria still has an estimated funding gap of about 2.1 trillion Naira.

During the panel session, the Director-General, Small and Medium Enterprises Agency of Nigeria (SMEDAN), Dr. Dikko Umaru Radda, said that the agency was not privy to financial disbursement and that MSMEs access to finance is grossly limited, even though financial institutions find it difficult to track and trace funds after disbursement.

Managing Director/CEO, Bank of Industry (BOI), Dr. Olukayode Pitan, represented by Mr. Obaro Osah, Divisional head SME, stated that the BOI traditionally provides interest-free support to industries and that based on values and beneficiaries, for every 1 billion Naira investment, as many as four million people would have benefitted.

He noted that the BOI regularly checks the impact of their interventions by visiting customers and holding customer forums through direct and indirect means that measures impact in terms of job creation and hybrid estimation using values of loans to estimate impact made in the system.

Executive Secretary, Lagos State Employment Trust Fund (LSETF), Ms. Teju Abisoye, said that the National Identity Number (NIN) could help trace MSMEs. The LSETF follows an accountability structure that ensures that customers follow proper documentation procedures, present guarantors, and use company accounts.

Mr. Abubakar Abdullahi Kure, the Managing director, Nigeria incentive-based Risk Sharing System for Agricultural Lending (NIRSAL) Microfinance Bank, revealed that NIRSAL microfinance bank continues to give out loans to support SMEs to help reduce the MSME financing gap.

He said the bank had received over 8 million loan applications from Nigerians. Only 670,000 have been approved due to limited resources, and that MSMEs need to think of alternative sources of funding as the government alone cannot close existing funding gaps.

During the question-and-answer session, Group head, emerging business Access Bank, Mrs. Ayodele Olojede, said that her financial institution provides a combination of business and lending services to MSMEs to help them contribute to the growth of the Nigerian economy.

She noted that the bank actively works with development financing organisations to strengthen their framework and gain an improved understanding of the market through partnerships that make risk criteria more flexible without the need for traditional requirements such as collateral.

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