There seem to be good times ahead for operators of Small and Medium Enterprises (SMEs) if the comments credited to the new Managing Director of Bank of the Industry (BoI), Mr Rasheed Olaoluwa, are to go by.
According to the MD, the bank has concluded plans to make loans available to SMEs. Unlike in the past, when the growth of SMEs has been hampered by lack of financial assistance from financial institutions, the BoI is set to appoint service support firms to facilitate the application of loans by Small Medium Enterprises.
“We are in the process of appointing business service support firms; firms that will engage the SMEs and help them to repackage their loan applications such that by the time those applications get to the BoI, they will be bankable proposals. That will increase the success of such applications,” said the MD during a courtesy call to the bank by members of the Nigerian Association of Small and Medium Enterprises.
He added: “We also have arrangement with microfinance banks, whereby we lend to them and they in turn lend to the micro enterprises that require N100, 000, for instance, to be able to carry out their activities. That programme is ongoing and as a matter of fact, we are encouraging more microfinance banks to come on board.”
Many small enterprises have collapsed as a result of lack of financial withers to sustain them. It is a known fact that small businesses offer employment to more people in any economy than the big players in the industry. While many big enterprises rely mainly on technology to perform their activities, many SMEs rely on vocational skills in their businesses, thereby employing those who have such needed skills in their businesses.
Lack of jobs and the increase in unemployment have been attributed to the non functional small and medium enterprises. It’s not their faults anyway. In recent times, there have been complaints by operators of SMEs that commercial banks, including BoI, refuse to grant loans to SMEs, preferring to support the big players in the communication, oil and gas industries.
However, the above statement credited to the BoI MD is an indication that SME operators can look forward to a better financial assistance, depending on their importance to the growth of the nations’ economy.
“There are SMES and there are SMEs; those that add value to the economy and those that are merely engaging in trading activities by importing items and selling. They don’t add value to our economy; they don’t contribute significantly to employment generation.
“We would like to support those SMES that engage in productive activities, those who have factories, no matter how small. Those are the SMEs that we would like to assist; that is the only way we can help to boost manufacturing to contribute significantly to the Gross Domestic Product,” said the new MD.
To achieve the objectives, the MD stated that cooperative lending among similar SMEs are being encouraged so as to make it easier to facilitate loans as it might be difficult to grant loans to individual small companies.
“That was why we set up a micro credit committee to consider solely credits that are less than N10m,” he said.
One of such areas is the agricultural sector. During one of his visits to the Federal Institute of Industrial Research Oshodi, FIIRO, Lagos, the MD said the agricultural sector has enormous capacity to offer employment to thousands of unemployed youths, adding that the federal government through BoI is poised to increase its financial assistance to small industries that deal in agricultural products.
This, according to him, would be done through provisions of equipments and technical knowhow to enable them perform optimally.
“ The first sectors is the agric agro-allied, agro-processing sector, whereby we are looking at not just exporting crops but adding local value to them, we are looking at processing those crops before we export them or consume them locally. We need to find home-grown solution to our economic growth. Rather than appeal to industrialists to utilise FIIRO’s inventions, we will support those who come to take up equipment from FIIRO,” he said. One of our key strategic development initiatives is to pursue linkages between industrialists and centres of innovative development solutions that can produce indigenous and low cost technology that would help accelerate growth industrially,” he said.
He added: “Recently, President Goodluck Jonathan launched the Nigerian Industrial Revolution Plan (NIRP), the document identifies four key sectors of Nigeria’s comparative advantage and one of them is agricultural processing which FIIRO has an edge in helping to accelerate development in that sector.”
Mr. Tunde Odukogbe, a player in the agricultural sector, said that the new intervention by the federal government is a welcome development. He is of the view that intervention, if well implemented, would resuscitate moribund agricultural produced companies, thereby offering employment opportunities.
“It is cheering news. One of the problems we have in the agricultural sector is the lack of equipments to work with most especially in the use of technology in improving our products. There are some agricultural products that need to be stored through some advanced storage machines but because of the lacks of funds to purchase these machines, many of our products are wasted. That is why there is high percentage of foods being wasted in this country,” he said.
“In advanced countries, agricultural products are stored and preserved using technology which makes them to last longer. If the Bank of Industry is ready to provide more financial assistance in purchasing these machines and also provide technical knowhow, I see the sector becoming the highest employer of labour.”
Mr. Orimadegun Agboade, the Deputy President, South, National Association of Small and Medium Enterprise (NASME), had also said that providing facilities for SMEs with genuine needs would help to improve the efficiencies of SMEs.
“As a crucial element towards business success especially for the SMEs, it is imperative to earmark special funds for NASME members based on genuine needs and strong recommendations from the national secretariat, especially on micro credit facilities, which in most cases are needed to grow their businesses.” Knowledge gap had continued to pose a serious challenge to most of the SMEs, and consequently affected their ability to manage borrowed funds.
The BoI MD made it clear in his visit to FIIRO that Nigeria is blessed in agriculture, pointing out that each state in the country has the potential to earn huge revenue from agricultural as each of them has at least one agricultural product that can be focused on for commercial and industrial developments and that industrialisation based on agriculture will make a lot of impact on the population.
“It is essential to build capacity for accredited equipment fabricators to improve our local technology by making it more effective, attractive and low cost in order to also encourage the youths to participate in Nigeria’s industrial revolution in this digital age,” he said.
The Director General/Chief Executive of FIIRO, Dr. Gloria Elemo, had also affirmed that the institute is also ready to contribute its quota to the agro-allied, agro-processing and minerals sector of the economy and home for industrial technology for the MSME sector.
“The institute has contributed through processing of local raw materials and the production of indigenous technology to the growth of SMEs in the country and has conducted researches into all the natural agro and mineral-based resources of the country,” she said.
Likewise, Mr. Saibu Bankole, who owns one of the biggest fish farms in Ibadan, Oyo State capital, opined that making funds available to small scale industries is the way out of the current unemployment in the country.
“If the government is serious about this, it would go a long way in helping small industries to expand their businesses. You can imagine the number of people that would be employed if SMEs have money to buy needed equipments for their businesses. However, BoI and commercial banks have only shown interest in supporting two sectors of the economy: oil and gas and the telecomm industries. Let us wait and see if they (BoI) would make good their promises.”
Olaoluwa further said that the BoI would partner with commercial banks in order for it to achieve its aim of lifting the SMEs.
“We try as much as possible not to be in competition with commercial banks but to collaborate with them. We are looking at a model where BoI will partner with SME-friendly banks, so that as we are giving long term project loans, the banks will also be giving short term working capital facilities and that way we can work together to succeed in this sector,” he said.
