SMEs need N48trn financing for growth ― Emefiele

GOVERNOR of Central Bank of Nigeria (CBN) Mr Godwin Emefiele on Monday revealed that the estimated 17.5 million surviving small and medium enterprises in Nigeria are in need of at least N48 trillion to thrive.

At the opening ceremony of a workshop for judicial officers on Secured Transactions in Moveable Assets (STMA) Financing Law in Nigeria, Emefiele also disclosed that 85 per cent of the Nigerian workforce is engaged by SMEs.

“Support for MSMEs financing is more critical now than ever, given the need to boost Nigeria’s long-term growth trajectory since exiting recession in the second quarter of 2017.

“In real terms, our GDP grew by 1.8 per cent (year-on-year) in the third quarter of 2018, compared with 1.2 per cent in the corresponding period of 2017.

“As a matter of fact, the observed growth was largely driven by continued improvements in non-oil sector activities, such as agriculture, information and technology, manufacturing, transportation and storage, trade, and other services,” he stated.

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According to the bank governor, 96 per cent of enterprises operating within these sectors are MSMEs while accounting for an estimated 48 per cent of Nigeria’s nominal GDP, seven per cent of our export, and about 84 per cent of the workforce.

“Undeniably, MSMEs contributes enormously to job creation, utilisation of domestic resources, income generation, and improvement of local technology.

“Despite these contributions, however, MSMEs across the country continue to face structural drawbacks, particularly due to their peculiar nature.

“Poor access to finance, the high cost of borrowing, inadequate infrastructure, non-conducive business environment, and weak capacity are some of the stylized challenges constraining MSME growth in Nigeria.

“Among these factors, access to affordable and sustainable finance has been identified in the development space as the most constraining.

“Strongly related to this is lack of acceptable collateral and the inherent information asymmetries.

“MSMEs are typically deemed risk-laden, plagued with the high mortality rate, and often lacking adequate collaterals acceptable for conventional credit.

“Accordingly, the estimated US$158 billion or N48.3 trillion financing gap which characterises MSMEs in Nigeria reflects the risk-driven apathy of financial intermediaries to MSME lending (IFC, 2017).”

He told the judges that CBN was moving towards enforcement of the STMA Act across all financial entities and thus solicited the full support of the judiciary and law enforcement agencies towards providing a robust and resilient financial infrastructure.

“This will deepen credit delivery to our productive sectors, especially among the MSMEs, and foster sustainable and inclusive growth.”

Acting Chief Justice of Nigeria (CJN), Ibrahim Tanko Muhammed described the workshop as timely and topical because access to finance was vital in the growth and development of any economy.

“It, therefore, became expedient to bring together Judicial Officers to harness ideas, experiences and opinions on the best possible ways to encourage the use of moveable assets as collateral for assessing loans.

“This workshop will involve trainings and discussions around access to finance, the legal regulatory framework for secured transactions in moveable assets as well as disputes that could arise therefrom.”