By PROVIDENCE OBUH

The Central Bank of Nigeria (CBN) has said that Micro Small and Medium Enterprises (MSMEs) contributed about 46.54 per cent to country’s GDP in 2012. Specifically, Nigeria had about 17.6 million MSMEs employing about 32.4 million people in the year under review.

Governor of the CBN Mr. Sanusi Lamido made these statements at the Annual MSMEs Finance Conference & D-8 workshop on Microfinance for Small and Medium Enterprises (SMEs).

Sanusi said, “In 2012, Nigeria had about 17.6 million MSMEs employing about 32.4 million people, and contributing about 46.54 per cent of nominal GDP. A recent survey by IFC and Mckinsey (2010) suggests that 80 per cent of these MSMEs are excluded from the financial markets.

“The state of MSMEs in the country underscores the importance of this conference. Between 2003 and 2012, commercial bank loans to small scale enterprises dropped at an exponential rate. Analysis of the annual trend in the share of commercial bank credit to small-scale industries indicates a decline from about 7.5 per cent in 2003 to less than one percent in 2006 and a further decline in 2012 to 0.14 per cent.

Some of the reasons for the financing gaps are not limited to the fact that the banks readily attribute their risk aversion stance for not lending to MSMEs to demand-side constraints, which include the lack of managerial capacity, inadequate collateral, and poor record keeping, amongst others, he added, noting that there also exist supply-side issues such as high transaction costs and lack of understanding by the banks of the nature and operations of MSMEs.

“Other constraints plaguing the MSME sub-sector in Nigeria include infrastructure deficit (especially, power and transport), policy inconsistencies, bureaucracy, multiple taxation and levies, weak intellectual property protection and contract enforcement, and insecurity.” The CBN governor said that there is a need for the formulation and implementation of policies to strengthen the MSME sub-sector.

“The CBN on its own part has been working assiduously towards developing a robust regulatory and supervisory framework and initiatives for improved access to finance for the sub-sector. Some of these are the Revised Microfinance Policy, Regulatory and Supervisory Framework; Certification Programme for MFBs; Designated Non-Financial Businesses and Professionals (DNFBP); Competency Framework; Payment System Transformation; development of a Moveable Collateral Registry; and the Financial Ombudsman Bill currently before the National Assembly.”

Sanusi. however, noted that the N220 billion Micro, Small and Medium Enterprises Development Fund (MSMEDF) is designed to further enhance access to finance by MSMEs with the following major objectives: Provide wholesale financing windows for participating financial institutions (PFIs); Improve the capacity of the PFIs to meet credit needs of MSMEs; Provide funds at reduced cost to PFIs; Enhance access of women entrepreneurs to finance by allocating 60 per cent of the Fund to them; and Improve access of NGOs/MFIs to finance.