Industrialists, experts seek probe of SMEs’ funds

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IndustrialistsIndustrialists and experts have urged President Muhammadu Buhari, the Federal Executive Council (FEC) and the Federal Ministry of Finance (FMoF) to investigate funds disbursed by the Central Bank of Nigeria (CBN) to the banks for the development of Small and Medium Enterprises (SMEs) in the last four years.

Some of the industrialists and experts, including SME owners who spoke with The Nation in separate interviews, said most of the banks demanded a lot of documentation and collateral from SMEs; that after meeting and satisfying their requirements, the banks allegedly allocated the funds to big investors and companies.

They noted that the development was detrimental to the economic diversification agenda of the Federal Government anchored on the SMEs and urged the president, the FGEC and the ministry of finance to investigate the matter.

A financial expert and Chief Executive Officer, Golden Hameed Venture, Mr. Gbolahan Adegbesan, said in view of this, there was need for President Buhari and the FEC to direct the CBN to open a window to allow SMEs access funds at lower rates.

He also called for a downward review of CBN’s Monetary Policy Rate (MPR) to enable the real sector to access more credit from banks and other financial institutions.

Adegbesan said a review of the MPR would bring about the desired results, considering the fact that the Federal Government needs the small and medium scale industries to boost the economy. He also pointed out that the high interest rates were limiting access to credit by manufacturers and SME owners.

A small business owner and former staff member of FirstBank Plc, Mr. Sunday Olusoga, said many banks were reluctant to lend to SMEs because many of them could not contain the difficulties of running their businesses profitably, particularly due to the high cost of energy and transportation facilities.

According to him, “If the lending rates remain high, banks will likely not give credit to SMEs; they will prefer to give to institutional borrowers who have stronger cash flows. For SMEs to become attractive to banks for lending purposes, a lot more needs to be done by the CBN.

“This is the time for the CBN and the Federal Government to evolve a risk-sharing arrangement to mitigate risks involved in lending to SMEs. This will encourage banks to lend to SMEs because they will not be solely responsible for their weakness and liability.

“The notion that there would be a lot of spending during the last general elections and increased liquidity in the economy and make it difficult to manage the economy was defeated by the way and manner the administration managed the election. For the first time in the history of our nation, there was no spending spree before, during and after the last general elections.”

Olusoga said a review of the interest rate would not put pressure on inflation and exchange rates. He urged the CBN to focus more on policy interventions, saying, the CBN needed to come up with policies that will assist the economy to grow above its population growth rate, adjust the MPR and ensure that it reduces the lending rates.

He said apart from clamouring for a reduction in interest rate, small business owners should synergise and call for an investigation into funds disbursed in the last four years to banks by the CBN for SMEs.

“We need banks that will target the SMEs alone. The Federal Government should mandate the CBN to empower microfinance banks, exclude big banks from having microfinance banks, monitor the money disbursed and make sure it gets to the SMEs to create massive jobs across the country,” Olusoga said, urging the government to create an enabling environment for the real sector to thrive.

A lecturer, Dr. Maroof Animashaun, said there should be policies to create linkages between the SMEs and other sectors, such as banking and manufacturing.

He suggested measures, such as dedicated institutional financing mechanism for the SMEs and the real sector, a comprehensive regulatory policy to delineate the role and responsibilities of the government and the manufacturing sector in the development of the economy.

A vibrant manufacturing sector, Animasahun said, would also provide jobs for millions of Nigerians and the restive youths across the country.

He said there was need for a sustained partnership between the banks and private sectors for effective funding of SMEs.

According to him, the country has not enjoyed the commercial benefits of SMEs because its owners lack the necessary capital.


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