Boosting SME, Agric Financing 

Increased funding of small and medium scale enterprises by financial institutions is a positive development that would fast-track federal government’s diversification programme, writes Goddy Egene

 The determination of the federal government to diversify the economy is not in doubt considering the many benefits it would bring. With a well -diversified economy that would no longer depend on oil as the major source revenue, the recovery from the current economic recession is guaranteed. Also, the national currency, naira, would be strengthened as there would be more sources of earning foreign exchange (fx). Besides, the manufacturing of some of the products locally will lead to a reduction in demand for fx for importation of foreign goods, thus strengthening the naira.

Small and medium scale enterprises (SMEs) are the key to the successful diversification of the economy because they are considered engine room of the economy. Unfortunately, the growth and development of SMEs have been stunted in Nigeria due to lack of adequate funding from financial institutions. Although while the benefits of funding SMEs are numerous, the risks are also high, hence many banks are reluctant to finance SMEs.

However, given the determination of the government to rejuvenate the SMEs, many financial institutions are now having positive attitude towards funding that sector. The financial institutions have either introduced deliberate products to meet SMEs’ demand or keyed in to government programmes aimed at boosting small scale industries.

One of such financial institutions is Heritage Bank Limited. The bank is becoming well known for supporting small businesses, which is another way of bringing as many small businesses as possible together in a bid to add value to the SME sector of the economy.

Heritage Bank has deliberately focused on the SME segment in a bid to create a fresh set of vibrant entrepreneurs that will create jobs and distribute wealth in the Nigerian economy because of recent statistics which indicate high unemployment among the youths that make up a large percentage of the population.

One of its initiatives in the MSME sector is its partnership with the Central Bank of Nigeria (CBN) and the National Youth Service Corps (NYSC) under the N3billion CBN Youth Innovative Entrepreneurship Development Programme (YIEDP) which is targeted at the youths, particularly current serving National Youth Corps members and those within five years post-service exit.

The bank launched a N500 million Young Entrepreneurs and Students (YES) Grant in Lagos. The initiative, which is in partnership with the Nigerian Youth Professional Forum (NYPF), will, according to the bank, support students and young entrepreneurs toward socio-economic freedom.

Apart from that and  in furtherance of its commitment to creating jobs and wealth, Heritage Bank in partnership with the Center for Value Leadership (CVL) developed various impact-driven programmes to empower the youths and women particularly in the under-developed communities in Lagos State and one of these is the Young Entrepreneurship Business Training Programme (YEBTP).

The YEBTP is a programme aimed at grooming, mentoring, and financing 100 aspiring and existing young micro entrepreneurs in Ajegunle, Lagos State. This will be achieved in the form of a grant scheme of about N8.5million, in which the funds will be used to purchase the equipment needed by the entrepreneurs.

Speaking on how the bank is assisting SME to  address one of challenges SMEs face, which is access to market,  Divisional Head, SME and Agency Banking, Heritage Bank, Mr. Obioma Emenike, said the bank has built initiatives around promoting access to market for SMEs such as the Heritage SME Business Fair, and the  novel Heritage SME Sunday Market.

“These events enable our SME customers to showcase and sell their products and services to potential customers/consumers thereby increasing their visibility and market reach. Likewise, in line with our value-chain optimisation, we leverage on our business structure as a bank to connect our SMEs to large corporates from whom they could source inputs at a cheaper and more affordable prices and link them to our retail clients for purchase of their goods and services. To enhance the skill-set of our teaming SMEs, Heritage bank currently runs a training and hand-holding scheme called SME Clinic. This is a visionary business solution aimed at providing smart, innovative and cost effective business support for our entrepreneurs that will also assist them to generate substantial value in their businesses. During this clinic, opportunities to access funding such as CBN Intervention funds, Grants etc. are availed to the SMEs” Emenike said.

Generally, Heritage Bank has extended its support beyond SMEs to the agriculture.  The recent provision of a N2 billion loan facility by the in collaboration with the CBN under the Commercial Agriculture Credit Scheme, to Triton Aqua Africa Limited (TAAL), for setting up of fishery production chain, has been widely acclaimed.

It is believed that the partnership between Heritage Bank and TAAL will help reverse this trend. Specifically, the company is expected to use the loan facility to expand its aquaculture businesses with the setting up of nursery/hatchery for the production of fingerlings and brood stock, and earthen ponds for catfish and tilapia in Lagos, Oyo and Osun States.

With the support of Heritage Bank and the CBN, the firm of TAAL is executing a strategy of backward integration of increasing local production to reduce importation of fish. The company will also help small-scale farms increase their fish production by making fingerlings easily available to them. In the short term, the loan support is expected to help TAAL double its current production capacity of 25,000 metric tonnes with a projection that the company will scale up its production to 100,000 metric tonnes in five years.

The partnership between Heritage Bank and Triton Farms would help boost local production, conserve scarce foreign exchange, enhance food security, and ultimately result in the creation of hundreds of new jobs, thus fitting into the federal government’s Agriculture Promotion Policy (APP) agenda.

Market analysts believe that the long-term tenure of the facility from Heritage Bank is a vivid demonstration of the fact that Nigeria’s financial institutions are positively responding to the challenges investors and farmers about the peculiarity of funding the agricultural sector.

The complaint over the years has been that while agricultural projects have long-term gestation periods, the funding provided by the banks was always of short-term duration. This mismatch in expectation between the lenders and the loan beneficiaries had over the years proved to be a major hindrance especially in the funding of big tickets projects in the agricultural sector of the economy.

Farmers and potential investors in the agriculture sector had consequently always accused the banks of preference for funding only projects with quick turnaround but without much value to the country in terms of job creation and contribution to the country’s development.

 However, living up to its philosophy of Create, Transfer And Preserve Wealth, Heritage Bank has taken agriculture as one of the prime sectors, which can be used to empower individuals and communities in terms of creating wealth from the soil and through the entire value – chain using value addition and industrialisation. The bank   the bank has been supporting various agricultural ventures across the country.

Key among such initiatives is Heritage Bank’s multi-billion naira partnership with the Oyo State government. Under the initiative, the bank is supporting the Oyo State Agricultural Initiative (OYSAI) a programme designed to revive agriculture, boost agro-allied businesses and massive empowerment programme for both youth and women across the state through the creation of thousands of jobs in the sector. This huge, albeit laudable, project that is spread across 3,000 hectares of land in 28 of the 33 Local Government Areas of Oyo State, is in three stages: food crop cultivation, cash crop/horticulture and food processing. Heritage bank is supporting agro investors involved in this initiative with funds and advisory services and indications are that the programme has already led to more than 20 per cent increase in food production in the State.

Heritage Bank is also supporting thousands of small holders’ farmers in Kaduna and Zamfara States in rice and soybeans production under the Anchor Borrowers Programme. These are laudable programmes that are capable of boosting government’s quest to diversify the economy from oil based to agriculture.

 

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