By Auwal Umar
In order to alleviate financing constraints faced by Micro Small and Medium Scale Enterprise(MSMEs) and to improve the economy of the country, the Development Bank of Nigeria has given out about 70 billion Naira to over 50,000 MSMEs from 2017 to date across the country.
Chairman of the Development Bank of Nigeria, Dr Shehu Yahaya disclosed this while speaking during the maiden edition of the DBN annual series lecture with the theme “Surviving to Thriving MSMEs as key to unlocking inclusive growth in Africa” in Abuja on Monday 29 July 2019.
He said the DBN was established in 2014 and commenced operations in 2017, as a wholesale lender to alleviate financing constraints faced by the MSMEs in Nigeria through the provision of financing and partial credit guarantee to eligible financial intermediaries on a market confirming and full financial sustainable basis.
Dr Yahaya said that studies and surveys by DBN, SMEDAN, CBN, and other stakeholders had identified finance as a major constraint for Micro Small and Medium Scale Enterprise(MSMEs).
“This was why the establishment of DBN is particularly essential so that it could act, along with other DFIs, DMBs, and MFBs to support Micro Small and Medium Scale Enterprise(MSME) which played a critical role in improving the growth of economies, jobs creation and address the challenges of poverty,” he posited.
Also speaking, the Permanent Secretary Federal Ministry of Finance Nigeria, Dr Mahmud Isa Dutsa said Micro Small and Medium Scale Enterprises is arguably the largest employer of labour in Nigeria, most of which have been with very minimal government intervention.
He said in many developed nations in the world, the government now recognize the emerging power of Small Scale and Medium Enterprises and has gone further to assist them with policies, plans and programs to enable the success.
Dr Isa Dutsa said the present administration led by President Muhammadu Buhari has recognised the need to pay the utmost attention to the MSMEs because they account for about 60 per cent of Nigeria’s GDP.
“This administration has demonstrated a willingness to develop this sector, by either enacting laws or setting up government agencies and institutions to address the challenges faced by the various stakeholders in this critical sector of the economy.
“Development Bank of Nigeria and other Development Finance Institutions are mandated to cater specifically for sustainable growth in various productive sectors of the economy. Some of these initiatives are incorporated into the Economic Recovery and Growth Plan,” Dutsa stated.
According to the permanent secretary,
the Development Bank of Nigeria is a wholesale Development Finance Institution (DFI) established to increase access to finance for the micro, small and medium-sized enterprises (MSMEs), and other small corporates.
In his remark, the Managing Director and Chief Executive Officer of the DBN, Mr Tony Okpanachi said that statistics have shown that across the continent, and many global economies, MSMEs are the bedrock of economic growth and development.
“Because of the critical role they play in accelerating economic transformation and industrialization.
In Nigeria, recent data released by both SMEDAN and National Bureau of Statistics (NBC) affirm that there are about 41.5million MSMEs in Nigeria and collectively they contribute to well over 50% of Nigeria’s GDP.
“However, access to finance is still a concern for this critical segment of the economy. The latest figure indicates that at the Micro level, about 90.5% do not have access to credit whilst the figure for SMEs is put at 67 per cent. Other pressing areas which rank high for SMEs are assistance in power and water supply – 83.5 per cent as well as tax rate reduction – 73.1 per cent.
Also speaking, former Minister of Finance, Dr Mansur Muhter said according to United Nations Deputy Secretary-General, Amina Muhammad, Micro Small and Medium-Sized business is key to creating 600 million new jobs needed by 2030 to keep pace with the growth of the world’s working-age population.
“Binding constraints to MSME development have limited access to finance and as the single biggest hindrance to MSME establishment and growth,” he stated.
Not only that, 70 per cent of SMEs in emerging markets lack access and greater financing obstacles than larger firms – High-risk premium; higher transaction costs; limited access to external finance.
Again, infrastructure deficit in Africa was recently estimated at USD 131 Billion annually. Unreliable and insufficient electricity supply, poor road network and unreliable transport systems and soft infrastructure deficit – limited manpower and capacity needed to drive successful business and poor enabling environment, non-conducive business environment investment climate, increased time and cost of doing business (Ease of Doing Business), weak or non-existent legal and regulatory framework, unfair regulations/bureaucratic bottlenecks.
“Soft infrastructure deficit, limited manpower and capacity needed to drive a successful business, insufficient awareness of financing options and inability to develop bankable projects, all combine to impede the development of MSME,” he concluded.