CBN puts MSME financing gap at N9.6 trn

In from Ali Smart …
Nigeria’s Micro Small and Medium Enterprises (MSMEs) lags behind other African nations in terms of access to finance, a report by the International Finance Corporation and the World Bank have said.
According to the report, the paucity of funds to the sector, is apparently to blame for the slow pace of progress as the interventions by state agencies is hardly enough to drive the growth and development of the sector.
Citing the World Bank report, the Assistant Director Development Finance Department of the CBN Mr. Jonathan Tobin, said the nation’s MSME sector is suffering from a N9.6 trillion financing gap.
He attributed the cause of the financing gap to “inadequate knowledge and refusal to learn how they behave when and why they do the things they do is a major challenge. The wrong perception of the risky nature of MSMEs and the fact that we have ascribed so much risks to MSMEs that they have become orphans to lending institutions.”
Tobin lamented that the Nigerian “economy is virtually dying but the banks are declaring billions as profit. But they forget that if the economy collapses everybody will be the worse for it. We have to take over.”
Besides, another problem besetting the MSMEs, is the lack of entrepreneurial skills by MSMEs.

Read also: CBN may end interventions to SMEs soon

“That is why the CBN set up Agricultural Development Centres and Outreach Centres. Poor governance structure is another challenge of MSMEs, they don’t like to dilute their businesses. Also only three percent of MSMEs goods are exported meaning that they’re either not good for export or they are all consumed locally.”
He urged banks to “develop customised risk management method, put in place inventory financing in place of collateral lending used by foreign banks, you can relate with an MSME so closely that he will depend on you for everyday decisions and he will carry supporting banks along. When you give them money and nobody cares about what they’re doing that is when they fritter away the loans.”
Nigeria, he said, has a very large MSMEs collection if they can be supported they will create jobs. “Youths are jobless because banks are not playing their various roles to assist government create jobs. There is need for paradigm shift as most banks don’t have MSMEs financing policy but that will soon change.”

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