Image credit: US-NIGERIA Trade Council USA
In light of Nigeria’s funding gap widening, the organized private sector (OPS) are clamoring for a 5 percent lending rate to small ventures in order to give them the enablement to unleash the economy’s growth. The OPS are of the view that SMEs create the most jobs and as such should be provided support with single-digit funds to afford them the ability to do more.
Iyolade Alaba Lawson, President of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), said that “A five-percent interest rate would further stimulate the productive sectors of the economy, create jobs and bring about new avenues for the operators of Nigerian SMEs.
Referring to the mist current Enterprise Baseline Survey engineered by the Small and Medium Enterprise Development Agency of Nigeria (SMEDAN), there are over 37 million SMEs in Nigeria, all of which contribute to nearly 50 percent of the Gross Domestic Product (GDP) of the country, and more than 60 million jobs for citizens.
In 2016, CBN said that banks’ lending to this category of business was less than four percent. The OPS says that Nigerians have to cut the Monetary Policy Rate, which is benchmark interest rate, down from 14 percent.
According to the President of the Manufacturers’ Association of Nigeria (MAN), Frank Jacobs, what Nigeria needs to do now is recover her single-digit rate of five percent fully. He believes that this move can simulate SMEs as well as manufacturing.
Interest rates have not ceased to head north as the Central Bank retains MPR at 14 percent. The average borrowing rate by real sector players in 2017 was the 22.6 percent which represents a 0.4 percent increase from 22.4 percent as recorded in 2016 by MAN.
According to the founder of the Tony Elumelu Foundation, Tony Elumelu, every USD 1 spent on SMEs generates USD 5. According to Jacobs, “It is crucial to intensify the implementation of the Moveable Collateral Registry and Credit Reporting System that were currently passed into law.” He as well added that it is vital to fast-track the re-capitalization of the Bank of Industry (BoI) to enable the platform to meet up with colossal credit demands of the industrial sector.
Referring to Jacobs’ remarks still, the Nigerian government needs to bring about access to various development funds created by CBN, such as the NGN 220 Bn Micro, Small and Medium Enterprises Development Fund (MSMEDF) and the NGN 3 Bn Real Sector Support Facility (RSSF) by relaxing the decapitating conditions that deny SMEs and manufacturers access to funding windows.