The Development Bank of Nigeria has identified increased access to finance for Medium, Small and Micro-Enterprises, MSMEs as a means of alleviating their financial constraints and ensuring that they remain in business through the Covid-19 pandemic period.
This was the summation industry experts stated this during a Webinar Series discussion by Development Bank of Nigeria, DBN, with the theme “Risk Sharing: A Key Driver for Increased Financial Access and Economic Development for MSMEs”.
Panelists on the session include: CEO, InfraCredit, Mr. Chinua Azubike; Group Head Emerging Business, Access bank Plc, Mrs. Ayodele Olojode; Senior Financial Sector Specialist, World Bank, Mr. Ahmed Rostom and MD, JNC International, Mrs. Claire Omatseye, alluded to the fact there is a need to increase awareness by key industry stakeholders in ensuring that the much-needed stimulus and alternative means of facilitating financing are discovered to stem the shock to Nigeria’s economic and financial system.
The panelists restated that Credit Guarantees Schemes (CGS) are popular policy instruments that were created to help alleviate the credit constraints faced by MSMEs.
They however regretted that most MSMEs in Nigeria do not fully understand the concept of risk-sharing and credit guarantees.
They also stressed the need for key industry stakeholders, MSMEs, Banks, and Regulators to openly discuss alternative means of financing and the existence of risk-sharing.
On economic growth challenges and the impact of COVID-19 in Nigeria, Senior Financial Sector Specialist, World Bank, Mr. Ahmed Rostom said 42% of individuals who were working in hospitality and service Industry before March 2020 are no longer working, a situation she described as disturbing.
Rostom said the survey which was carried out by the World Bank between April and March 2020.
The Group Head Emerging Business, Access bank Plc, Mrs. Ayodele Olojode said high interest rates lack of tangible collateral and economic conditions are some of the reasons MSMEs lack access to regular and sustained finance.
She emphasized that “Risk sharing facilities will help increase access to finance which helps MSMEs grow, increases employment and output in the economy”.
She further explained that “the credit guarantee industry in Nigeria is still at a nascent stage, where the volume of guarantees and the size of the industry contributions to SMEs remain low compared to peers in other economies. Credit guarantee is the future because it will compensate for insufficient collateral, provide regulatory capital relief for banks, growth for MSMEs, increased economic GDP and job creation.”
In her submission, the Managing Director, JNC International, Mrs. Claire Omatseye stressed the importance of risk sharing among all stakeholders.
She said, “For MSMEs, risk sharing helps eliminate financial oppression and predatory lending, while also ensuring prosperity is shared equitably. For the government, risk sharing contributes to the realization of its economic objectives and stabilization policies”.
