The Federal Government is partnering commercial banks across the country to fashion out a new funding mechanism that will give Small and Medium scale Enterprises (SMEs) increased access to cheap funds.

The Minister of Trade and Investment, Mr. Olusegun Aganga, disclosed this during a meeting with SME Desk Managers of Banks in Abuja.

Aganga noted that the new initiative was aimed at removing barriers militating against banks’ lending to Micro, Small and Medium scale Enterprises (MSMEs) as part of renewed efforts to increase their capacity to create jobs, generate wealth and transform the country’s economy.

He said, “The rate of unemployment in Nigeria is becoming alarming and staring us in the face. There is no gainsaying the fact that the best way to checkmate the situation is to have a virile Micro, Small and Medium Enterprises sub-sector. The recent survey conducted by SMEDAN, in conjunction with the National Bureau of Statistics revealed that we have close to 20 million MSMEs in Nigeria.

“The figure represents over 80 per cent of the total number of enterprises in the country and accounts for 75 per cent of Nigeria’s total employment base. If we don’t create an enabling environment for this important sub-sector to thrive, we will all suffer its negative consequences.”

He added, “The MSME community has been complaining bitterly of not being able to access cheap funds from the banks. They have also said that where services are available, it takes the banks ‘forever’ to process them. The vision of the Ministry of Trade and Investment is to increase the contribution of SMEs to the nation’s Gross Domestic Product from 10 per cent to 30 per cent and increase export earnings through SMEs from three per cent to 25 per cent within the lifetime of this administration.

“To be able to achieve this, we have identified commercial banks and development finance institutions and are partnering them to come up with SME-friendly products or re-design existing products to enhance access to finance by SMEs.  We want to partner the banks to remove the barriers inhibiting them from lending to SMEs at a reduced interest rate.”

Aganga said that SMEDAN was currently carrying out an SME Rating Project to minimise the risks associated with SMEs by training and re-training them to become more competitive and attractive for funding by commercial banks.