Osinbajo: FG to Scale up Interventions in MSMEs Sector

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Yemi Osinbajo

James Emejo in Abuja

Vice President Yemi Osinbajo yesterday said the present administration is working towards a glorious future where Micro,Small and Medium Enterprises (MSMEs) “can grow sustainably, scale up exponentially, become globally relevant entities as well as contribute immensely to the economic development of Nigeria and Africa in general”.

Osinbajo stated that since the inception of the President Muhammadu Buhari’s administration, the government has recognised the need to pay utmost attention to MSMEs as they account for about 60 per cent of Gross Domestic Product (GDP).

Speaking in Abuja at the Development Bank of Nigeria (DBN) Lecture Series, themed :”Surviving to Thriving: MSMEs as Key to Unlocking Inclusive Growth in Africa,” Osinbajo, who was represented by the Permanent Secretary, Federal Ministry of Finance, Mahmoud Isa Dutse, noted that the Buhari’s administration has demonstrated a willingness to develop the 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.

This is coming as the Chairman of DBN, Dr. Shehu Yahaya has disclosed that over N70 billion had been disbursed by the bank to MSMEs since it became fully operational in 2017.

He said the bank had been able to address some of the challenges in MSMEs sector through the provision of wholesale loans to financial institutions for on-lending to small businesses.

He added that its intervention had further impacted over 50,000 enterprises, most of them owned by women.

“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.

“The specific objective of the bank is to alleviate financing constraints faced by MSMEs and other small corporates in Nigeria by providing financing, partial credit guarantees and technical assistance to eligible financial intermediaries on a market-conforming and fully financially sustainable basis.

“Since the establishment of the bank in 2014 as a public limited company, the subsequent licensing by Central Bank of Nigeria and commencement of full operation in 2017, DBN has recorded tremendous results in addressing some of the challenges facing MSMEs through the provision of wholesale loans to Financial institutions for on lending to MSMEs and through leadership, which is why were are here today,” Osinbajo explained.

Also, the Managing Director/Chief Executive, DBN, Mr. Tony Okpanachi, further noted that MSMEs are the bedrock of economic growth and development globally given the critical role they play in accelerating economic transformation and industrialisation.

Quoting data from the National Bureau of Statistics (NBS) and the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), he said there are about 41.5 million MSMEs in the country which collectively contribute to over 50 per cent of GDP.

He pointed out that access to finance remained a concern for the critical segment of the economy.

According to him, about 90.5 per cent of these micro enterprises do not have access to credit while 67.9 per cent of small and medium scale enterprises (SMEs) are also starved of adequate financing.

He said power and water supply as well as tax rate reduction constitute also constituted priority concerns for small businesses in the country.

“MSMEs are, collectively, the largest employers in many low-income countries including Nigeria, yet their viability and growth is restricted by lack of access to long-term debt capital.

“Our mandate at the Development Bank of Nigeria is to alleviate financing constraints faced by the Micro, Small and Medium Enterprises (MSMEs) in Nigeria through the provision of financing and partial credit guarantees to eligible financial intermediaries on a market conforming and fully financially sustainable basis.”

And this lecture series is our way of a platform for a robust exchange of ideas to tackle the challenges and take advantage of opportunities that exist in the MSME segment of the economy.

“We believe that at the end of today’s interactions we would have a broadened understanding of these challenges and critically examine and act towards practical steps to resolve some of the obstacles that constrain growth within the segment.

Okpanachi expressed optimism that discussion from the lecture would help to upscale the capacity of PFIs to lend to MSMEs and improve their capacity across all sectors of the economy to access and use finance efficiently.

He added that DBN is positioned to play a focal and catalytic role in providing funding and risk-sharing guarantees.

However, in his keynote address, African Union High Representative for the Peace Fund and former President and Chairman, African Development Bank (AfDB), Dr. Donald Kaberuka SMEs are currently challenged by other concerns which are beyond financing, particularly those of infrastructure and high taxes.