By Donatus Nwaogu
Micro, small and medium scale enterprises (MSMEs) are globally regarded as the backbone of any economy.
MSMEs contribute to improved living standards. They bring about substantial local capital formation and help in achieving high level of productivity and capability.
They have also been identified as a vehicle for employment generation and providing opportunities for entrepreneurial sourcing, training, development and empowerment. Developing nations such as Nigeria characterised as low income earners by the World Bank, value SMEs for several reasons.
According to the United Nations Industrial Development Organisation (UNIDO), SMEs have a significant role to play in economic development. They form the backbone of the private sector; they make up over 90 per cent of enterprises in the world and account for 50 to 60 per cent of employment. They also play an important role in generating employment and poverty alleviation.
That is why the Central Bank of Nigeria (CBN) has been resolute in its determination to support operators in the real sector of the economy. It recently revealed that 585,593 beneficiaries have so far received N462.722 billion as at May 28, 2021, from its various intervention schemes to support MSMEs and individuals.
A breakdown of this showed that from January 2021 to date, N157.517 billion have been disbursed for 29 real sector projects under the Real Sector Support Facility- Differentiated Cash Reserve Requirement (RSSF-DCRR). In the same vein, the sum of N85.190 billion have been disbursed under Micro Small and Medium Enterprises Development Fund (MSMEDF) to 746 beneficiaries as at May 28, 2021.
The MSMEDF was established in recognition of the significant contributions of the MSME sub-sector to the economy and the existing huge financing gap. Ten per cent of the Fund has been devoted to developmental objectives such a grants, capacity building and administrative costs while 90 per cent commercial component had been released to Participating Financial Institutions(PFIs) at two per cent for on-lending to MSMEs at single-digit interest rate. Under this Fund, eligible activities to be financed include agricultural value chain, services, cottage industries, artisans, trade and commerce and any income generating business as may be prescribed by the CBN from time to time.
But the broad objective of the Fund is to channel low interest funds to the MSME sub-sector of the Nigerian economy through PFIs to enhance access by MSMEs to financial services; increase productivity and output of micro-enterprises; increase employment and create wealth; and engender inclusive growth
Similarly, from January 2021 to date, N26.008 billion has been disbursed for 10 projects under the COVID-19 manufacturing intervention schemes, while N255.992 billion have been disbursed for 78 projects under the CMIS from January 2020 till May 28, 2021.
In all, a total of 91 healthcare projects have also been funded to the tune of N97 billion under the Healthcare Sector Intervention Facility (HSIF) as at May 28, 2021, to support healthcare institutions across the country. Likewise, the sum of N111.707 billion have been disbursed by the CBN under Agri-Business/Small and Medium Enterprise Investment Scheme (AGSMEIS) to 29,023 beneficiaries as at May 28, 2021.
The AGSMEIS is an initiative to support the federal government’s efforts and policy measures for the promotion of agricultural businesses and MSMEs as vehicles for sustainable economic development and employment generation.
In the same vein, in line with its desire to stimulate output growth, the sum of N3.199 billion have also been disbursed under the Creative Industry Financing Initiative (CIFI) to 341 beneficiaries as at May 28, 2021, while the sum of N253.448 billion have also been disbursed under the targeted credit facility to 548, 345 beneficiaries as at May 28, 2021.
Equally, in line with its drive for youth empowerment, the sum of N3.004 billion have been disbursed under the Nigerian Youth Investment Fund (NYIF) to 7,057 beneficiaries as at May 28, 2021 and the sum of N6 billion have been disbursed under SANEF to 14 beneficiaries as at May 28, 2021.
Furthermore, the sum of N173 million have been disbursed under the Youth Enterprise Development Fund (YEDF) to 67 beneficiaries as at May 28, 2021. YEDP disbursement by geo-political zone showed that for the South-west, 39 beneficiaries got N98 million; North-central, 11 beneficiaries got N29 million and for the South-east, eight beneficiaries received N22 million.
In addition, for the South-south, six beneficiaries received N16 million; the North-west had two beneficiaries which received N4.970 million and the North-east had one beneficiary which got N3 million.
Under the N1 trillion real sector fund, a total of 234 real sector projects valued at N857. 644 billion was approved and disbursed from November 2018 till May 28.
Of the total 234 project, 155 real sector projects valued at N615 billion was financed from January 2020 till May 28, 2021 to: 78 manufacturing projects – N256 billion; 36 agricultural projects – N84. 481 billion; 30 Service projects – N191 billion; and 11 Mining Projects – N83.5 billion.
Similarly, about N700 billion had been disbursed in various agricultural programmes and as of January 2021, the CBN had disbursed N554.61 billion to 2,849,490 farmers to boost food security under its Anchor Borrowers’ Programme alone since 2015.
In order to ensure that more Nigerians benefit from its interventions, the CBN recently expanded the schemes to cater for non-interest financial institutions (NIFIs). The move was also part of efforts to increase access to NIFIs and promote financial inclusion.
These schemes included Non-interest Guidelines for the Accelerated Development Scheme (AADS); Non-interest Guidelines for Intervention in the Textile Sector; Guidelines for the Operations of the AGSMEIS for NIFIs; Guidelines for MSMEDF, among others.
Owing to the massive interventions across the real sector of the economy, the Governor of the CBN, Mr. Godwin Emefiele, expressed optimism that the economy would continue on the path of positive Gross Domestic Product growth rate.
He attributed the 0.51 per cent growth recorded in the first quarter of 2021 to the central bank’s interventions.
“The economy is confronted by a contracting output where growth is negative. And the normal way in economics you would want to really recover from a contracting economy is to stimulate the economy with a lot of easing and by injecting liquidity into the system so as to stimulate consumption, investment, increased government expenditure, increased export earnings and possibly see what you can do to reduce imports.
“At the last meeting, the MPC encouraged the management to adopt some form of administrative measures to mop up liquidity and control money supply in the system and in the process rein in inflation by reducing the money supply that would help to control inflation,” he added.
But at same time, on the output side, the central bank agreed to use its development finance tools to boost output by ensuring that liquidity and funding is made available at concessionary rates to employment-generating and output-stimulating sectors of the economy.
“So, for us, it is science to expect that GDP recorded growth. So, it is not surprising that we are seeing what we are seeing presently. That is why we decided to hold interest rate and we have decided to continue our administrative measures.
“On the output side, we were encouraged to continue to use our interventions to agriculture, manufacturing and the targeted credit facilities to make sure we are able to stimulate consumption and investments in order to ultimately yield positive result for growth in the economy,” he added.
Indeed, out of the targeted credit facility, almost the entire N300 billion has been disbursed and the MPC recently encouraged the management of CBN to increase it to N400 billion.
This means more money would be made available to households, small businesses for then to go back to business, which would ultimately yield employment and grow our economy.
He also faulted claims by critics that the Bank’s intervention programmes, particularly the ABP, were skewed to favour some sections of the country.
He described the criticism as unfair, especially given all the CBN had done in some states, including the Federal Capital Territory (FCT). He said the CBN was working on several fronts to fast-track domestic production in the country.
Emefiele said: “In South-South where I come from, and where I have been personally criticised, in Edo State, we have disbursed over N10 billion. Some of you may have seen some of our programmes in Edo State in 2019 where we asked Edo State to allocate land to companies that are interested in palm plantation as well as in cassava…”
The CBN governor said attaining self-sufficiency in food production would not come cheap, adding that the country could make steady and consistent progress through positive strides in the right direction.
According to him, the right synergy among stakeholders would catalyse the growth process, while the apex bank is always ready to offer an effective partnership to deliver on the critical national mandate of attaining self-sufficiency in food production.
He added: “We believe significant improvements in domestic production of staple food items would help in attaining our price stability goals while reducing our dependence on imported food items.”
He stated that the sustainability of current efforts in agricultural production could only be guaranteed if the youths are attracted to agriculture.
According to him, the youths have the talent, energy, enthusiasm, technological adoption capacity and all the right drive to revolutionise agricultural production in the country.
He said: “We must meet them half-way to ensure that we provide the enabling environment to make agriculture attractive to them.”
He said the CBN was ready to support youths willing to engage in agriculture as the sector offered significant benefits for them.
He said the bank had put in place measures to improve access to credit for youths interested in agriculture under the ABP and the AGSMEIS.
He said the implementation of the ABP like any other smallholder financing programme had been challenging due to factors, including the country’s landholding system, prolonged poor productivity per hectare, poor adoption of modern agronomic practices, lack of adequate mechanisation support services, post-harvest losses among others.
He said the CBN had continuously improved on its learning experiences and now could effectively tackle the challenges with proper planning, timely execution of plans and synergy among all stakeholders.
Therefore, considering the significance of MSMEs, there is need for the central bank to be encouraged to continue to support operators in that segment of the economy as well as for the fiscal authorities to roll out measures to support the development finance efforts of the banking sector regulator.
