Need for banks to set up SME desk
Over the years, lack of access to finance has been a major challenge to Small and Medium Enterprises (SMEs), and this has resulted to exclusion of a number of adult Nigerians, especially in the informal sector of the economy.
According to information from Enhancing Financial Innovation and Access (EFINA), close to 43 percent of our working age population have no access to bank loans, and have to resort to obtaining loans at predatory rates; they also have to incur higher charges and travel long distances in receiving or sending funds due to lack of financial access points within their localities.
In spite of the various intervention funds set aside by the CBN for the sub-sector, not much has been accessed due to not being able to meet the requirements for accessing the funds.
Going forward, the hurdles of accessing funds by small businesses will be over with the recent measures put in place by the bankers committee and the Central Bank of Nigeria (CBN).
Part of such initiatives or measures include the mandatory setting up of SME desk by deposit money banks, reduction of interest rates to five percent, among others.
“Improving access to finance for millions of Nigerians who do not have access to financial services can serve as a catalyst for sustained growth and creation of jobs in our economy”, Godwin Emefiele, governor, of CBN said.
“We intend to support measures that will deepen penetration of financial services in the country to those who are financially excluded from the system”, he said.
The measures will also take into consideration Micro Small and Medium Enterprises (MSMEs) that are unable to obtain credit facilities from financial institutions.
Consequently, the CBN has relaxed some stringent conditions for accessing some of the intervention funds such as the N26.8 billion Agri-Business, Small and Medium Enterprises Investment Scheme (AGSMEIS) and the MSME Development Fund.
The development of the movable Collateral Registry will help in improving access to credit particularly for MSMEs that do not have fixed assets to serve as collateral in order to obtain lending facilities.
According to EFInA Access to Financial Services in Nigeria 2016 survey, the financially served proportion of the Nigeria’s adult population grew by an average of 6.4 percent between 2008 and 2012.
This growth slowed down to 0.2 percent in 2014, with an eventual decline of 2.1 percent in 2016• This decline was driven by a reduction in the proportion of adults accessing financial services through Other formal providers (other than Deposit Money Banks) and informal financial providers.
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