Minister of Trade and Investment, Mr. Olusegun Aganga
By Obinna Chima
The Federal Government Thursday disclosed plans to develop a system for grading commercial banks’ funding of small and medium scale enterprises (SMEs) in the country.
Minister of Trade and Investment, Mr. Olusegun Aganga, made this remark at the signing of a memorandum of understanding (MoU) for the introduction of a single-digit interest loan between First Bank of Nigeria Plc and the National Association of Small Scale Industrialist (NASSI) in Lagos. The loan is at nine per cent interest rate and can be accessed by all NASSI members.
According to the minister, the proposed grading system was the outcome of a survey that was jointly carried out by the National Bureau Statistics (NBS) and Small and Medium Enterprises Development Agency Association of Nigeria (SMEDAN).
He stated that at double-digit interest rates, businesses were bound to suffer, adding that this would in turn affect the nation’s growth and
Aganga said: “We are encouraging the development of a grading system for banks to know how they support SMEs in the country. We have supported the banks and we will continue to support the banks, so it is important to know those banks that are actually playing their part in the economic development of the country.”
“SMEs all over the world are the highest employers of labour which makes them the drivers of growth all over the world. You will therefore agree with me that a collaboration of this nature, which promises to ease access to finance by SMEs and also grow the all-important agric sector, is one that must be encouraged if we must enhance our production and economic efficiency as a country.”
“The competitiveness of any economy depends on how efficient all the resources in the production process are utilised, especially the ability to reduce cost without undermining quality and standards. In this regard, attaining an efficient cost of financing is critical for the success of SMEs, which is where the intervention of First Bank becomes very commendable.”
Aganga also pointed out that lack of access to finance, low level of business support and high operational cost were major factors that had hindered the development and performance SMEs as well as the potentials of backward and forward integration, especially in the agric sector.
Earlier, the Group Managing Director/Chief Executive Officer, First Bank, Mr. Bisi Onasanya, explained that the MoU was in furtherance of the bank’s support for SMEs, saying that was meant to promote the growth and development of industries and industrialists in the country.
“This MoU also supports the bank’s strategic focus on financial inclusion as it would mitigate the challenges of credit delivery to the unbanked market segment through mobilised funds which will avail credit facilities to registered NASSI members at concessionary rate.
“In addition to warehousing and disbursing mobilised deposits, First Bank is also committed to support NASSI through business advisory services, capacity building and development of relevant Information Technology infrastructure as well as the issuance of our bio-metric identity card to all NASSI members,” the First Bank boss added.