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Tag: MSMEs

  • Osinbajo to inaugurate MSMEs summit

    Osinbajo to inaugurate MSMEs summit

    The Vice-President, Prof. Yemi Osinbajo, will set the ball rolling at the second annual Micro, Small and Medium Enterprises (MSMEs) summit and awards ceremony on Tuesday in Abuja.

    This was contained in a statement by Alhaji Bature Masari, the Director-General, Small and Medium Scale Enterprise Development Agency of Nigeria (SMEDAN) on Monday in Abuja.

    The statement said the Vice-President, who is expected to be the special guest of honour would preside over the event at the Presidential Villa.

    The theme of the summit, according to the statement, is “Entrepreneurship for National Development: The Place of MSMES in the Economy under Change Agenda’’.

    It said that renowned economist and founder, Lagos Business School, Prof. Pat Utomi, will be the lead speaker, while the Minister of Industry, Trade and Investment, Mr Okechukwu Enelamah, is the chief host.

    The event will attract a spectrum of stakeholders, including existing and intending MSME entrepreneurs, business development service providers, financial institutions and manufacturers of equipment for MSME operations among others.

  • CBN urges Nigerians to access N220b MSMEs fund

    CBN urges Nigerians to access N220b MSMEs fund

    Investors within the micro to medium categories have been urged to take advantage of the N220 billion facility set aside by  the Central Bank of Nigeria (CBN) for the development of Micro Small and Medium Enterprises (MSMEs).

    Central Bank Consultant and Managing Director, Kajaura International Consult Limited, Dr. Yakub Abdalla who spoke in Gombe, Gome State  as part of his company’s sensitisation campaign on the Fund,  said farmers, artisans, market men/women and any entrepreneur that is either financially excluded or under-served is entitled to the fund.

    He said the fund would also trigger job creation for the private non-formal sector, adding that lending would be to only members of cooperative societies.

    He said qualified Micro Finance Banks (MfBs) could also participate by borrowing for onward lending to others, adding that the apex associations would serve as vehicles for monitoring and evaluation of the funds.

    Dr. Abdalla said: “The CBN governor recently expressed concern that more than 90 per cent of Nigerians are yet to hear about the fund.

    “There is therefore need for proper sensitisation of the fund – people need to understand that the fund is available to qualified Nigerian entrepreneurs and that there is an easy way to access the fund.”

    He therefore urged Nigerians to forward their applications, assuring that the CBN would receive and process them.

    The Consultant also urged  Gombe state government to help get the information to the attention of all its MSMEs, especially in the rural areas.

  • NDIC: Poor funding stalling MSMEs’ growth

    The Nigeria Deposit Insurance Corporation (NDIC) has linked the challenges of micro, small and medium enterprises (MSMES) to their poor funding.

    It said inadequate funding of MSMEs remained a major challenge, adding that as at June 30, deposits mobilised by the 936 microfinance banks stood at N173.3 billion.

    Its Managing Director, Alhaji Umaru Ibrahim, who spoke at a  one-day sensitisation workshop for operators of microfinance banks (MfBs), said all hopes were, however, not lost. He said effective risk management would help MfBs to respond to risks and also promote profitability and objective decision making.

    He said the workshop with Deepening the practice of microfinance banking through effective enterprise risk management as theme, created q platform for the corporation to share experiences on latest developments in the sub-sector. Experience sharing, he said, would ensure the survival of such institutions.

    Ibrahim said for MfBs to access the N220 billion MSMEs fund launched by the Federal Government last year, they must demonstrate strong enterprise risk management capable of enhancing the eligibility criteria.

    “NDIC, as an insurer, reimburses deposit of microfinance banks up to a maximum limit of N200, 000 per depositor in the event of failure of such microfinance bank. The new average coverage level represents an increase of 100 per cent over the earlier coverage level of N100, 000,” he said.

    The NDIC chief said microfinance banks have to be interested in enhanced risk management frameworks and take necessary steps to improve their compliance levels with sound risk management.

    “For instance, an increase in the interest rate could make micro-loan repayment difficult. Furthermore, new loans could become less attractive for small borrowers due to affordability pressures. Therefore, micro-finance banks should be able to assess borrowers’ capacity and willing-ness to continue with loan repayments in the case of an interest rate rise. Lack of thorough and effective assessment of market risk could have devastating impact on banks,” he said.

    Represented by Director, Special Insured Institutions Department at the NDIC, Joshua J. Etopidiok, Ibrahim  also said the Central Bank of Nigeria (CBN) had in September, 2013 issued the “Revised Regulatory and Supervisory Guidelines for Microfinance Banks in Nigeria” aimed at not just introducing a risk-based approach to the supervision of microfinance banks, but also in response to the changing financial landscape.

    He said the enterprise risk management framework was “developed to provide a proactive process to assess the safety and soundness of all microfinance banks operating in the country. He warned that microfinance banks must reduce risks on their own terms through effective management oversight and performance evaluation.”

    Ibrahim said the term enterprise risk management, in the context of a microfinance bank, was “the process of controlling the likelihood and potential severity of an adverse effect”, adding that, NDIC would deploy Differential Premium Assessment System (DPAS) in determining Deposit Insurance Premium for micro-finance banks.

    He assured that NDIC would continue to train only microfinance banks, which are up to date in their premium payment to the corporation, adding that, the corporation’s ability to sustain its efforts in ensuring that all insured institutions remained on the path of sustainable growth and development, depended heavily on the premium contributions by insured institutions to fund the Special Insured Institution Fund (SIIF).

     

  • Promoting MSMEs for common good

    Promoting MSMEs for common good

    Micro, Small and Medium Enterprises (MSMEs) are agents of economic growth worldwide. For First City Monument Bank (FCMB), which was appointed by the Central Bank of Nigeria (CBN) to disburse the N220 billion MSMEs’ fund to small businesses, MSMEs’ financing remains a tool for entrepreneurship development and wealth creation, writes COLLINS NWEZE.

    Before they became big players, multinationals were micro, small and medium enterprises (MSMEs). Hence, they remain the building blocks for new businesses and wealth booster for every nation.

    Experts say MSMEs have the potential to create jobs, businesses, wealth and empower people across various incomes, adding that they are engines of economic growth.

    The Central Bank of Nigeria (CBN) and other stakeholders in the economy said the most serious challenge confronting MSMEs is funding. They insist that while a small business may have a very strong plan, quality product or efficient service, many of them suffer from poor or lack of funding.

    Mercifully, the Federal Government, through its agencies, has intervened in the sector with N220 billion funds.

    In addition to policies energising the sector, there have been fiscal incentives, grants, bilateral and multilateral agencies’ support aids as well as specialised provisions geared towards empowering the MSMEs’ sub-sector.

    The Federal Government, through the CBN, has, therefore, provided additional financing windows to help the MSMEs. First City Monument Bank (FCMB) is one of the banks appointed by the CBN to disburse the fund aimed at supporting the sector.

    CBN Governor, Godwin Emefiele, has relaxed the rules to make the funds more accessible. He said the CBN has also addressed all complaints raised by financial institutions, including the spread of profits to cover their costs.

    • Mrs Osibogun
    • Mrs Osibogun

    The President, Chartered Institute of Bankers of Nigeria (CIBN), Mrs. Debola Osibogun, hailed Federal Government’s decision to launch the MSMEs fund, power sector reforms and establishment of the Nigerian Mortgage Refinancing Company.

    She said the government has also created specialised funding for the key sectors of the economy, such as Agriculture, Education, Maritime, Information Communication Technology, and Textiles.

    “We are happy to note that the banking industry remains a very dependable ally in promoting these transformations across all sectors of the economy and is also working assiduously towards achieving the nation’s goal to be one of the top 20 economies in year 2020,” she said.

    • Balogun
    • Balogun

    FCMB Managing Director Ladi Balogun said the lender has continued to provide support at various levels, including funding and advisory services, to customers in the MSMEs’ segment to grow their businesses.

    For instance, the lender, with Shopping Internet Services Limited, held a capacity building tagged ‘’FCMB capacity building initiative: Empowering the Nigerian SMEs’’, where free training and radio programmes cutting across various topical issues in the MSMEs were discussed.

    Balogun said the programme would enhance the financial, marketing and management skills of small and medium firms, and through it, the bank hopes to equip operators with the necessary skills they can readily deploy to effectively operate and grow their businesses and bottom-lines.

    He said the pilot phase of the exercise, aptly christened: ‘’Cluster marketing’’, kicked off in Lagos and it has run for five months after which it would be extended to other parts of the country for another 18 months.

    “The course content and the resource persons, who are highly experienced, were carefully chosen to ensure participants derived maximum benefits from the training,” he said.

    FCMB’s Group Head, Business Banking, Mr. George Ogbonnaya, said the training was to expose participants to modern skills to help realise their business objectives.

    Affirming that this was in line with the the bank’s Corporate Social Responsibility (CSR), he added: “FCMB realises that SMEs play pivotal roles in the growth of the nation’s economy. We also understand that a number of factors combine to determine the success or failure of an SME.’’

    According to him, the bank is committed to building a strong SME base in the country and focused on being a strategic partner to such businesses, considering the huge opportunities they offer in job creation, poverty eradication and economic development.

    Ogbonnaya said the bank had disbursed about N1.3 billion to 35 small business enterprises at all interest rate of nine per cent under the MSMEs scheme, with many other beneficiaries yet to access their processed funds.

    According to analysts, this amount represents the highest so far disbursed by any bank under the MSME scheme. He also said the bank had retooled its lending practice to SMEs with the introduction of a new and separate SME credit policy tailored to suit small and medium size businesses and also appointed dedicated lending officers in the branches to bring relevant skills and free consultant closer to SMEs, among others.

    The Group Head revealed that the lender is committed to building a strong SME base. He added that apart from funding MSMEs, the bank developed a product, known as FCMB Business Account, which has been designed to meet the banking needs of customers in the SME space.

    These needs vary from collection services, account management flexibility, alternate channels availability, accessibility to funds in account as and when needed, cost efficient pricing, access to loans, among others. “It comes with a business debit card. This product comes with affordable account opening balance, with minimum opening balance of only N5,000, no limit to frequency of withdrawals as cheques are valid for clearing, apart from other very friendly features,’’ he assured.

    The FCMB e-invoicing, introduced by the lender, is a unique electronic invoice payment service that has been targeted primarily at MSMEs, which enables them send invoices and receive payments against invoices tied. The product has been structured to increase productivity in the MSMEs’ sector.

    “It is not only an electronic invoicing system, the e-formulae combine basic inventory management and accounting with electronic payment services. The system automatically stimulates the control of cash-flow and also puts SMEs’ customers at ease when making payments. It also reduces manual processing of invoices and makes an SME stay competitive in business,” the bank said.

    Ogbonnaya said there are over 17 million Small and Medium Enterprises (SMEs) in the country. Adding that the bank realises their strategic importance as agents of growth.

    While reiterating the commitment of the bank to ensure the successful disbursement and utilisation of the fund, he urged SMEs’ operators to avail themselves of the opportunities being provided by the bank’s free six-month service in the sector.

    Also, FCMB is set to support women managed-businesses in line with the MSME fund scheme. To achieve this, the bank is collaborating with women involved in SMEs for the provision of funding, sponsorship and advisory services.

    These recent interventions are samples of FCMB’s commitment to financial inclusion, and the resolve to deliver mainstream financial services to the various segments of the population. For instance, the bank recently launched a product christened: Personal and Business Account, which guarantees traders, merchants, self-employed professionals and artisans, who operate businesses in their personal names, security in case of unexpected disasters, such as fire and flood incidents.

    Again, the incentives are mouth-watering, and they include zero Commission on Turnover (COT) charge, which is replaced by a small monthly service fee. Customers can also carry out an unlimited volume of debit transaction and withdrawals for a fee as low as N1,500.

    According to him, the account reduces the cost of banking for customers with heavy and daily transactions. In addition to reduced banking charges, the bank will support the customer with a free insurance cover of up to N1 million in case of loss of goods/stock due to fire or flood disaster.

    Also, the rebasing the economy showed MSMEs’ contributions to the economy as massive. About 10 per cent of total manufacturing output and 70 per cent of industrial employment are from the MSMEs. The sector has not only promoted industrial and economic development through the use of local resources, production of intermediate goods, but has also helped in the transformation of rural technology.

    They will provide the best opportunity for job creation and rural development. In most major economies, the critical role of SMEs is recognised. But there are challenges.

    Besides, the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) as well as the Small and Medium Enterprises Equity Investment Scheme (SMEEIS) come to ready mention.

    Whereas the former is an agency saddled with seeing to the resolution of all problems facing MSMEs, the latter is a financing window, which is supposed to attend to the funding challenges of small businesses. Even where the SMEDAN had tried its best to sensitise small business entrepreneurs, such sensitisations have amounted to little or nothing without requisite funding.

     

  • ‘Why govt should provide incentives for MSMEs’

    Abuja Chamber of Commerce and Industry  (ABUCCI) has asked the Federal Government and other stakeholders to support and provide incentives for the development of Micro, Small and Medium Enterprises (MSMEs) in the country.

    President of ABUCCI, Tony Ejinkonye,  who stated this at the 10th Abuja International Trade Fair, entitled ‘Entrepreneurship as a Panacea for Economic Growth’  said the theme of this year’s fair was chosen based on the reality that about 75 per cent of the organised private sector was made up of SMEs.

    He said the call became necessary given the importance of MSMEs in the development of any economy, and urged the government to reposition the manufacturing sector, as it is the engine of growth of any economy.

    Ejinkonye also appealed to the government to make the development of infrastructure a priority, saying it was important for the current administration and other stakeholders to seriously address the transport sector, especially the rehabilitation of the railway system and road network facilities.

    He said this would greatly enhance the transportation of both raw materials and finished goods. He noted that the current administration’s effort in bringing solution to the fuel crisis had led to an increase in economic activities in the country.

    On the trade fair, he said it was targeted at promoting accelerated development of commerce, as well as promote the revitalisation and diversification of the economy to boost non-oil exports.

    According to him, 2015 is also designed to galvanise international entrepreneurship into the nation’s economy.

    “Entrepreneurship is the engine that drives every 21st Century economy; robust entrepreneurships is a must for a robust national economy,” he said.

    Meanwhile, John Chukwu, FCT Permanent Secretary, represented by a Director, in the ministry, Abubakar Sani, said the theme of the fair was timely and commendable, given the current economic realities of the nation’s economy.

    Chukwu noted that the increasing number of unemployed youths has made entrepreneurship a viable platform to deploy the hands of job seekers and economically empower them.

    He said in a bid to reduce unemployment in the territory, the FCTA established Abuja Enterprise Agency to key into the Federal Government’s job creation programme.

    “We strategically established the Abuja Enterprise Agency as a special purpose vehicle for the development of entrepreneurship skills and the provision of viable financial muscle to support entrepreneurs,” he said.

  • Bankers committee: MSMEs grow economy

    The Bankers’ Committee and the Central Bank of Nigeria (CBN) have restated the strategic importance of the Micro, Small and Medium Enterprise (MSME) to the growth of the nation’s economy.

    This was stated at the recent workshops in Abuja and Owerri on the N220billion Micro, Small & Medium Enterprise Development Fund organised by the Bankers’ Committee’s sub-committee on Economic Development, Sustainability & Gender in collaboration with the Central Bank of Nigeria.

    In his remarks, CBN’s Director, Development Finance Department, Dr. Mudasiru Olaitan, said, the essence of the workshop is to get the  Deposit Money Banks (DMB) to key- into the strategic plan of the apex bank for the MSMEs.  “MSMEs are the engine room for economic growth, vehicle for job creation, tools for poverty alleviation and wealth creation for any country’s economy, so there is need to support them to grow so that the economy can grow,” Olaitan  stressed.

     

  • ‘Why CBN is supporting MSMEs’

    ‘Why CBN is supporting MSMEs’

    The  Director, Development Finance Department, Central Bank of Nigeria (CBN), Dr. Mudasiru Olaitan has said the apex bank is supporting the Micro, Small and Medium Enterprise (MSME) because it beleives it is the engine of growth for the economy.

    Olaitan spoke in Abuja at  the N220billion MSME Development Fund workshop organised by the Bankers Committee’s sub-committee on Economic Development, Sustainability & Gender in collaboration with the CBN.

    He said the essence of the workshop was to get the Deposit Money Banks (DMBs) to key into the strategic plan of the apex bank for the MSMEs.  “MSMEs are the engine room for economic growth, vehicle for job creation, tools for poverty alleviation and wealth creation for any country’s economy, so there is need to support them to grow so that the economy can grow,” Olaitan  stressed.

    In his presentation, the Assistant Director, MSME Development Fund, CBN Mr. Tobin Jonathan, said the workshop was organised to cross-fertilise ideas and bridge the knowledge gap on the MSME sector by the lending institutions and to also correct the wrong perception of the risky nature of the sector.

    He sad: “The rejection rate of MSME applications by commercial banks is very high. We are aware that this is necessitated by the banks’ aversion to risk due to lack of entrepreneurial skills and the poor governance structures of most MSMEs, hence the necessity of the workshop to enlighten the bankers and encourage them more on the need to partner with us on the need to grow the sector.”

    In his  presentation titled Movable Collateral, Registry Reforms and MSME Financing in Nigeria, Dr. Olasupo Musa of the Monitoring & Evaluation Department, National Collateral Registry said, CBN is collaborating with International Finance Corporation (IFC) to establish a National Collateral Registry to stabilise MSME financing and also boost the confidence of Nigerian banks in playing active roles in financing the real sector in Nigeria, most especially the MSME sector.

  • Bridging MSMEs’ financing gap

    Bridging MSMEs’ financing gap

    The Micro, Small and Medium Enterprises (MSMEs) sector has been described as critical to the economic growth of any country. Its potential to create jobs, boost production and reduce poverty has been globally acknowledged. But the sector’s capacity to do so in Nigeria has been limited by its inability to secure credit from Money Deposit Banks, a development that has created a huge financing gap of N9.6 trillion. Assistant Editor OKWY IROEGBU-CHIKEZIE looks at the various innovative financing options, technologies and products that could bridge the gap and reposition the sector.

    Micro, Small and Medium Enterprises (MSMEs), the world over, drives the growth of the economy, but Nigeria with its population of over 170 million has not been able to tap the benefits of the sector. This is due to lack of access to funds by operators in the sector. Operators believe that if the required funds are accessed, the economy will experience substantial growth much more than what obtains now. Besides, with the growth of the sector, unemployment at all levels will be reduced. The funding requirement of the MSME sector is in deficit of N9.6 trillion.

    However, in recent years, the Bank of Industry (BoI) has striven to address the issue by entering into agreement with some Money Deposit Banks (MDBs) to buoy credit advancement to entrepreneurs in MSMEs.

    BoI signed a Memorandum of Understanding (MOU) with 10 SME-friendly banks. The banks were carefully chosen to partner with BoI in the financing of its SME customers. The banks are Access Bank, Diamond Bank, Ecobank, Fidelity Bank, First Bank, First City Monument Bank, Skye Bank, Stanbic IBTC Bank, Standard Chartered Bank, and United Bank for Africa.

    “The BoI is also exploring other alternative modes of funding such as continuation of sector-specific intervention funds by the Central Bank of Nigeria (CBN), Ministry of Agriculture, Solid Minerals and others; managed funds from various state governments and foundations; long-term loans at very low interest rates from multi-lateral/international development institutions”

    Under the arrangement, BoI and the banks will collaborate in the provision of long-term loans to qualified SMEs based on BoI’s Risk Acceptance Criteria (RAC) and the provision of working capital to the SMEs by the banks also based on their individual RAC.

    BoI Managing Director Mr. Rasheed Olaoluwa said: “The synergy that has evolved between BoI and the SME-friendly banks is unprecedented. It will undoubtedly foster greater access to finance for SMEs, financial inclusion for Nigerians and engender wealth and accelerated job creation for Nigerians.

    “Nigerian businesses cannot be built on debt alone. It has long been part of the bank’s vision to find ways to provide needed equity capital and business advice to promising Nigerian businesses”

    “It is also our expectation that the SMEs that will benefit from this partnership will be good corporate citizens and meet their financial obligations to the partnering banks. This will stand them in good stead for consideration for larger loan amounts with the hope that they will in the near future metamorphose into large enterprises.”

    To address the challenges of poor packaging of loan requests and non-bankable business plans, which are believed to be responsible for the low level of financial support to the sector, BoI in fulfilment of its mandate of providing long-term finance and business support services to large, medium and small projects, signed a service agreement with 122 Business Development Service Providers (BDSPs).

    At the signing of the agreement in Lagos, Olaoluwa said the BDSPs would collaborate with BoI to identify credible SMEs that require finance. They would also develop bankable business plans and proposals for SMEs to facilitate their access to finance, including providing post-finance services such as mentorship, handholding, financial advice and inculcation of best practices among others.

    However, in doing so, BoI is aware of MSMEs’ age-long poor record keeping and weak financial management, which make it difficult to evaluate their financial performance and invariably. They inhibit their ability to access loans from banks or attract investors. This was why the bank has since repositioned its systems, processes and services by riding on the back of robust technologies and products. This was in the hope of taking advantage of the new digital and mobile world to offer its customers the benefits of speed, mobility and convenience that come with it.

     

    Addressing the issues

     

    BoI’s chief, Olaoluwa, has never hidden his intention to turn things around at Nigeria’s foremost development finance institution. On assumption of office on May 19, last year, he resolved to use the bank as a vehicle to drive Nigeria’s industrialisation by focusing on the MSMEs sector. This is because of his belief that  the sector  is the engine of economic growth on account of its potential to create jobs, boost production and reduce poverty.

    To unleash the industrialisation drive, the bank under Olaoluwa’s watch, unveiled a number of innovative financing options, technologies and products to position the MSME sector to play its catalyst’s role in industrialisation. Some of them included seed and angel funding, value chain finance, venture capital and crowd funding, among others.

    The BoI is also exploring other alternative modes of funding such as continuation of sector-specific intervention funds by the Central Bank of Nigeria (CBN), Ministry of Agriculture, Solid Minerals and others; managed funds from various state governments and foundations; long-term loans at very low interest rates from multi-lateral/international development institutions.

    Just last week, BoI partnered Grow Africa Equity Partners Limited to raise a $60million Venture Capital Fund (VCF) for small and medium enterprises (SMEs). The VCF aims to provide equity capital, along with strategic and operational support to early stage and fast growing businesses involved in technology, agriculture, consumer goods and services sectors.

    Under the arrangement, BoI made an investment commitment of $6million to aid provision of equity capital for fast growing businesses. “Nigerian businesses cannot be built on debt alone. It has long been part of the bank’s vision to find ways to provide needed equity capital and business advice to promising Nigerian businesses,” Olaoluwa said.

    He explained that the partnership with Grow Africa is one of the avenues for realising this vision and that the bank remains committed to the pursuit of its core mandate of providing long-term financial support to small, medium and large companies/projects in Nigeria’s key sectors, adding that the investment commitment was informed by the track record of Grow Africa’s partners, the developmental impact of their existing portfolio and their strong pipeline for potential new investments.

    The Chairman of Grow Africa Equity Partners Limited, Adedotun Sulaiman, noted that with the right type of support, Nigerian businesses can become global leaders. Sulaiman, who also chairs the Boards of Interswitch, SecureID,  IDEA,  New Horizons and others, said: “Over the past 10 years, I have provided capital and advice that have helped several businesses grow from ideas into multi-billion naira industrial leaders. Through this partnership, I hope to see many more entrepreneurs realise their dreams of creating leading companies and delivering massive value to Nigeria.”

    For instance, BoI in partnership with Kinesis Consulting Limited developed an SME Accounting Application (SAAPP), which allows users keep proper records of transactions and generate requisite financial statements. SAAPP, The Nation learnt, is a user-friendly, simplified and menu-driven accounting tool that does not require formal accounting knowledge by the entrepreneur. With the software, SME customers will be empowered with business information on their mobile phones.

    Because of its unique features and benefits, the application enjoys the buy-in of operators and stakeholders. For instance, SAAPP will allow BOI SME customers to easily generate basic financial statements such as balance sheets, which report on the SMEs’ assets, liabilities and ownership equity; profit & loss accounts, which report on the SME’s operation in terms of income (sales), expenses and profit or loss; cash flows such as SMEs’ operating, investing and financing activities.

    “A survey conducted by the Nigerian Bureau of Statistics (NBS) and the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) showed that there are 17.28 million MSMEs in Nigeria employing 32.41 million people and accounting for an estimated half of Nigeria’s Gross Domestic Product (GDP)’”

    One of the key features of SAAPP is the integrity of the financial statements generated on it. Once financial statements have been prepared, they cannot be altered at will. Consequently, it is the same statements that will be produced for submission to the tax authorities, statutory government agencies and financial institutions. The App also contains a link that enables the SMEs mail their financial statements directly to BoI. The App is programmed for installation on a maximum of three devices per business entity and is available at a pocket-friendly price of N20, 000.

    BoI has also gone a notch higher, unveiling an online loan application portal for the convenience of its prospective SME customers. With the portal, customers no longer need to come physically to the bank to submit their loan applications. This has the advantage of shortening the bank’s loan processing Turn-Around-Time (TAT). The portal has document uploading capability as well as allows the loan applicant select the preferred BoI state office location where the application will be processed. The online loan application portal can be accessed on the Bank’s website.

    Many operators and stakeholders, who spoke with The Nation said through the use of these innovative strategies, BoI has been able to enhance access to some of the sector-specific intervention funds. The bank is charged with administering the several sector-specific intervention funds and schemes introduced by the Federal Government in the hope of breathing life into dead or dying key sectors of the economy, particularly the industrial sector, which is recognised  as holding the key to sustainable economic growth.

    The expectation was that government through BOI would leverage on these special intervention funds to address the dearth of long term investible funds required by manufacturers and industrialists particularly MSMEs to transform the industrial sector into a vibrant and globally competitive one capable of guaranteeing bountiful returns to all stakeholders and the economy.

    With BoI’s online loan application portal, local designers seeking for funds for expansion now have a seamless way to access the recently launched N1billion Fashion Fund for players at the micro, small- and medium-scale levels. The Fashion Fund joins two other SME funds recently launched by the bank namely, the N5billion Cottage Agro Processing Fund and the N1billion NollyFund.

    Olaoluwa explained, the Fashion Fund is in fulfillment of the bank’s commitment to develop special funds and credit products to deepen penetration of and enhance support to specific SME clusters. “We see an opportunity to support Nigeria’s leading fashion businesses to increase their production volumes and quality, thereby making them more competitive in both the domestic and international markets,” he said.

    The BoI boss observed that African prints, known as Ankara fabrics, have become very popular in the fashion world due to the ingenuity and industry of Nigerian designers such as Dakova, Frank Oshodia, Tiffany Amber and Deola Sagoe, among others. He said amazing designs are now created using local fabrics and are featured in both local and international fashion shows.

    He added that many Nigerian Fashion designers have received training in some of the best fashion schools in the world, and therefore have the intellect, talent, creativity, skills and drive to take Nigeria’s fashion industry to the next level on the global fashion stage. According to him, the growth in Nigeria’s urban population, the macro-economic environment, increasing purchasing power of the emerging middle class and a strong appetite for consumer goods are positive factors in favour of a flourishing fashion cluster.

    However, these funds are the latest addition to the long list of similar funds intended to give the industrial sector the required push. Some of the earlier special intervention funds that have been introduced, targeting one segment of the industrial sector or the other include the N100 billion Cotton Textile and Garment (CTG) Fund, for the revitalization of the CTG industry along the entire value chain; N10 billion Rice Intervention Fund, to ensure Nigeria attains self sufficiency in rice production; and Africa Development Bank (AFDB) $500 million Line of Credit, for the development of export-oriented Small and Medium Enterprises (SMEs).

    Others are: Federal Ministry of Women Affairs and Social Development (FMWASD) N90 million Business Development Fund, to provide soft loans to women entrepreneurs; Central Bank of Nigeria (CBN) N220 billion Intervention Fund, for Micro, Small and Medium Scale Enterprises (MSMEs); National Automotive Council’s N16.91 billion Fund, for the development of the automobile industry sub-sector; and N2 billion Sugar Development Council Fund, to ensure Nigeria attains self sufficiency in sugar production by 2020.

     

    How to check the high mortality rate of MSMEs

     

    Olaoluwa identified financial illiteracy, poor technological skills as the reason behind the high mortality rate of Small and Medium Enterprises (SMEs). To check the failure rate, the bank, he reiterated the reason behind the accreditation of some BDSPS to help some start-ups in packaging their documentation such as feasibility studies and doing business plan that can enable them obtain loan from the bank.  “We not only want to support SMEs in terms of financial, but also in imparting knowledge to help the businesses grow. We upgraded our banking application from Equinox to a more robust version called Rubikon, which provides a strong platform for the automation of our processes to deliver improved services to our customers.

     

    Why MSMEs are critical

     

    The consensus of experts and stakeholders is that the future of Nigeria lies more on the leveraging of MSME’s. The sector, according to experts, is strategically positioned to provide up to 80 per cent of jobs, improve per capita income, increase value addition to raw materials supply, improve export earnings and step up capacity utilisation in key industries. This was why BoI focused on providing innovative, dynamic and wide range of financial services to the sector.

    The bank believes that increased integration of these smaller businesses into the mainstream economy will provide a creative solution to Nigeria’s crisis of unemployment. MSMEs generate employment opportunities per unit of capital investment because they are generally more labour intensive. The bulk of Nigerian businesses fall within the small scale businesses, which account for over 90 per cent of all companies in the country.

    A survey conducted by the Nigerian Bureau of Statistics (NBS) and the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) showed that there are 17.28 million MSMEs in Nigeria employing 32.41 million people and accounting for an estimated half of Nigeria’s Gross Domestic Product (GDP). However, access to affordable finance remains one of the major challenges inhibiting the MSMEs’ growth and development.

    According to the CBN, only 4.2 million MSMEs have access to finance. CBN Assistant Director, Development Fund Department, Mr. Jonathan Tobin, said because of banks and other lending institutions’ aversion to lending to small businesses in the informal sector, about N9.6t is needed to bridge the financing gap in the MSMEs sector.

    Tobin, who spoke last week in Abuja at a workshop on Micro, Small, Medium Enterprise Development Fund (MSMEDF) organised by the Banker’s Committee of the CBN, said from 2002 till date, lending by Money Deposit Banks to the sector has reduced significantly, requiring N9.6trillion to bridge the gap.

    The BoI chief, however, was not unaware of this, which was why he prioritised the need to address the imbalance caused by Money Deposit Banks’ aversion to financial inter-mediation for industrial firms and small businesses through the roll out of various financing options and interventions.

    In doing so, however, he has consistently argued that the problem of many SMEs is not access to cheap funds as claimed by many existing and intending small businesses, but the inability of such entrepreneurs to develop and defend bankable projects. He also identified poor packaging of loan requests as being responsible for the low level of financial support to the sector.

    He said it was in recognition of these challenges, and in fulfilment of BoI’s mandate of providing long-term finance and business support services to the sector, that the bank engaged the services of BDSPs and introduced other techsnologies and innovative financing strategies and products tailored to the needs of operators in the sector.

     

  • Vague project ideas bane of MSMEs

    The Bank of Industry has said  that it is not lack of fund that is the major problem of Micro Small and Medium Enterprises (MSME’s) in the country but vague project ideas, lack of business capacity, poor access to markets and high operating cost. These factors, no doubt,  militate against their growth and sustainace.

    This was disclosed by the chief executive officer and managing director of  the bank,  Mr Rasheed Olaoluwa at the 16th annual lecture of the Catholic Brothers United (CBU), St. Agnes Catholic Church, Maryland, with  the theme: ‘Enhancing Small and Medium Scale Businesses: A viable Tool for Poverty Eradication held in Lagos over the weekend.

    Olaoluwa said although many entrepreneurs thought that lack of finance is the core of their problems but research has shown that ‘’many MSME’s do not have a clearly defined project idea before embarking on the journey as the goals of the project and the reasons for doing it, along with the sub-projects or major tasks involved, must be clearly understood from the onset to enhance the chances of success’’.

    Olaoluwa, who was represented by the divisional head, Large Enterprises,BOI,Mr.Joseph Babatunde, said for strong and sustainable MSME’s in the country, there should be provision of financial and tax incentives, friendly regulatory environment and export potential must be encouraged, large corporations should help MSME’s build sustainable supply chain capacity and local distribution networks should be strengthened.

    On export potentials,he said  ‘’SMEs contribute a large share of manufactured exports in most industrialized East Asian economies like China and India, ranging from 31-56 per cent than less developed African economies of less than 1 per cent in Tanzania and Malawi, and 4 per cent in Nigeria for instance. There is therefore the need to focus on policies that will promote the SMEs export potential to boost economic growth and development’’.

    He encouraged Nigerians to visit the BOI  as they are focused on helping SME’s grow and achieve its aim of development and reducing poverty in the country.

    Commenting on the reason for the theme,the president of CBU,Mr Emmanuel Uwukhor, said  it was in consideration of the various developmental chakllenges currently facing the country.

    Uwukhor said  ‘’SME’s as we all are aware are critical to the development of any economy as they posses great potentials for employment genertion,improvement and development of local technology,output diversification as well as forward intergration with large-scale industries’’.

  • Kwara disburses N1.2b to MSMEs

    Kwara disburses N1.2b to MSMEs

    Kwara State  has disbursed over N1.2b to traders, farmers, as well as artisans under its empowerment programme, the Governor, Dr Abdulfatah Ahmed, has said.

    Ahmed who stated this at the opening of Brightway Microfinance Bank in Ilorin, said the money was disbursed through 10 Microfinance Banks across the state.

    He said the scheme has  enhanced inclusive banking, adding that financial services have been extended “to more than 50,000 individuals and 2,500 cooperatives who would otherwise have been excluded from banking services.”

    Ahmed said arrangements have also been completed to inject additional funds into the program so that more entrepreneurs and youths would start or expand their business, development, he explained that would create  employment for more people in the State.

    The governor advised commercial and microfinance banks “to design services and products that are suitable and affordable to MSMEs.

    He added that such services should include affordable microfinance facilities with low interest rates that would be appealing to entrepreneurs.