After many decades of talk and empty policies, how the challenge of Small and Medium Enterprises (SMEs) having access to loans and financing can be defeated is yet to be seen.
Many entrepreneurs have told stories of how they got help from family, friends and well-wishers who believed in their dreams to enhance their startup.
That SMEs are critical to the development of any economy cannot be overemphasized. They possess great potentials for employment generation, improvement of local technology, output diversification, development of indigenous entrepreneurship and forward integration with large-scale industries.
At the recent 5th EU–Nigeria Business Forum held in Lagos, Hajiya Zainab Ahmed, the Minister of State, Budget and National Planning, linked the inability of commercial banks to lend to Small and Medium Enterprises (SMEs) to Federal Government’s indebtedness to banks via local borrowing.
The second day of the forum titled “Harnessing Nigeria’s Potential for Economic Growth’’ was dedicated to integrating SMEs into global value chain, and the major problem echoed at the forum centered on the inability of SMEs to access finance from commercial banks in the country.
Interestingly, the first point of call for business owners is the Bank, but unfortunately the institutions are unwilling to lend to SMEs for obvious reasons. According to the minister, she argued that banks are not able to borrow to SMEs because government is heavily borrowing from them.
“80 per cent of Nigeria’s domestic debt comes from commercial banks,” she noted.
The minister said that the present administration was working with development partners and the International Finance Corporation (IFC) to ensure that it secured loans from abroad. She explained that the government was doing everything possible to ensure real GDP growth rate of about 3-4 per cent by 2017.
She added that the Nigerian government needed the European Union to continue to support its developmental agenda.