Small And Medium Enterprises Need N9.6tn

The Central Bank of Nigeria (CBN) has put the funding gap for the Micro, Small and Medium Enterprises (MSME) sector at N9.6trillion, The Punch informs.

Jonathan Tobin, the assistant director of Development Finance Department, announced this figure at the MSME development fund workshop.

 Tobin is sure that the money will assist the MSMEs to create jobs and contribute significantly to the Gross Domestic Product of the economy.

He said that banks lending to the sector has been declining since 2003, adding that lending from financial institutions to the sector is currently less than one per cent of total credit to the economy.

The director explained that it was because of the risk-aversed nature of the banking sector that the apex bank introduced some of the intervention funds to boost the development of the MSMEs.

He said: “Nigeria banks are aversed to taking risks. They like to play safe. The economy is virtually collapsing yet banks keep declaring huge profits. There are currently 17.3 million MSMEs in Nigeria, employing about 33 million people. Yet only 4.2 million of these have access to finance. Despite this, from 2002 till date, lending by Money Deposit Banks to the sector has reduced significantly. Now N9.6tn is needed to bridge the financing gap in the sector.”

He added: “Banks and other lending institutions should offer tailor-made solutions to lending to the MSMEs instead of the current one-size-fits-all approach. Customised risk management lending method in place of collateral driven lending currently employed by banks should be developed.We strongly recommend that banks start lending from their balance sheet. There is also need for collaboration between CBN and other government agencies on the implementation of various initiatives geared towards de-risking the sector and making finance available to MSMEs.”

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