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Industrialists okay Credit Guarantee Scheme for SMEs financing

By Franklin Alli
Operators in the industrial sector of the economy have okayed Credit Guarantee Scheme for SMEs financing instead of equity funding.

This was their reactions to the Central Bank of Nigeria’s recently established N200 billion Small and Medium Enterprises (SMECGS).

In a telephone feedback, various private sector associations and individual company Directors / Chief Executive Officers, expressed preferences for credit guarantee scheme to drive the sector.

President, Manufacturers Association of Nigeria, Alhaji Bashir Borodo: “We welcome the apex bank’s SMEs credit guarantee scheme.  It’s a very good development, and the credit guarantee aspect is better because equity financing has not work over the years.  A lot of our members are not keen to dilute ownership but over time, credit guarantee might give way to equity financing.”

Buttressing, Obong Jackson, Managing Director, Jackson Devos FZE, manufacturers of Crown carpets, Calabar, Cross River State, said that credit guarantee scheme is okay because it’ll ensure that the funds are utilised for the investments purpose.
Jackson further said that he prefers credit guarantee facility instead equity financing because, as he puts it, “ not many SMEs have the equity base to put forward and access the loan.”
General Manager, Haffar Industrial Co.Ltd, Michael Adebayo, also lauded the introduction of the SMEsCG  scheme, asserting: “It’s good and sensible.

If only the apex bank’s authority can transparently disbursed the money.  The SMEsCG , he believes, will encourage more SMEs ventures to come up.  “The scheme is commendable, and CBN should go further to encourage Independent Power Projects on power supply in cluster areas like Lagos.  He said that he favours credit guarantee to equity funding as most SMEs company don’t have collaterals to support equity investment.

According to Mr. Duro Kuteyi, Managing Director, Spectra Foods Limited, credit guarantee for SMEs is better than equity financing because the money can be used for factory building, working capital and for machinery.
National President of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) Dr. Simon Chukwuemeka Okolo, who also reacted,  lauded the Central Bank of Nigeria CBN over its thoughtfulness in setting aside the N500billion and N200billion credit facilities for the industrial sector.

Okolo, who however described these credit schemes as temporary, opined that they might no be able to address the problems of the sector that are more fundamental in nature and pointed out that the establishment of such policies in the past which did not eventually achieve the desired objectives due to poor implementation.

“In the past, the economy was divide into several sectors with stipulations regarding the interest rate chargeable and the percentage of a bank’s credit that should be extended to each of the sectors with a deliberate attempt made in the process to promote the growth of the real sectors of manufacturing, Agriculture and mining with penalties for non compliance on banks. It is obvious that these policies did not achieve desired results, otherwise the nation’s economy would not still be suffering from some of the problems and inadequacies that characterized it today,” he stated.


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