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We’ve always taken SMEs capacity building seriously —Gbenga Shobo

Gbenga Shobo is the Executive Director, Retail Banking South, First Bank of Nigeria. In this interview with Saturday Vanguard Business, he explains the sudden interest of banks empowering SMEs in the country even as First Bank is leading on capacity building of the sector. “Empowering SMEs is the easiest way to grow any economy”, he said. Excerpts:


Nigerian banks seem to have realised that Small and Medium Scale Enterprises (SMEs) are the engine room of any economy, why the sudden interest of First Bank?
The sudden interest you have noticed from other banks has been a strong selling point for First Bank. Half of our retail loan book is made up of loans to SMEs. All the various surveys that have been done conducted clearly that First Bank has the most SMEs in the industry. The same surveys show we lend the most to SMEs too.

So we have always taken SMEs very seriously. The sudden interest of banks in the sector is because the informal sector of the Nigerian economy is growing bigger by the day, and we all know the high state of unemployment in the country. A lot of students graduate from the universities and there are no white collar jobs for them unlike in the past.

So a lot of them are starting their own businesses. One area that is growing now is online retailing. In the past nobody thought of going to internet to buy a pair of shoes, but today you can see new areas of online business popping up daily. That is why a lot of banks are taking SMEs seriously now as the sector is growing and is a very large part of the Nigerian economy.

Apart from that, do you see the N20 billion SMEs fund as a help that could drive the sector?
Yes! It will help. The major challenge of SMEs is actually access to finance. That CBN fund is a drop in the ocean. My answer to that is yes it would help, but more needs to be done to assist the sector by banks being interested in SME’s, understanding them and then creating products that would be useful to them so that they will have access to finance to develop whatever business ideas they have.

On Monetary Policy that could help SMEs sector
Like I said earlier, what will really help SMEs is access to finance. In order for them to get financing they must understand how to show that their business are viable. Most of them cannot do this. Money is not the only thing that is important, you must be able to use that money, pay the bank back and make profit.


So, First Bank for example, has done a lot of capacity building whereby we bring SMEs together and teach them the process of banking their money, reconciliation of statements etc. Monetary policy is currently tight which has affected pricing of loans but that doesn’t stop banks from lending to SMEs.

Since some SME operators complain lack of access to finance, do you think PPP method can be of help to the sector?
Public Private Partnership (PPP) can help but another area that will be useful to encourage banks to lend to SMEs is the provision of loan guarantees by the government and Central Bank of Nigeria.

You said, the IT industry is growing, is that the area First Bank wants to focus its SMEs funding?
That is one of them. We are strong in education.  We have given out a lot of loans to schools, primary, secondary and tertiary. Online retailing is relatively new and growing. We have always been traditionally strong in agriculture, manufacturing, trade, healthcare.

Right now, we are talking to some of the international organizations that can support us on healthcare lending. So, you can’t box it into one area because SME’s are well diversified. Wherever we find you and your business we are ready to back you.

How much have you disbursed so far on the education sector?
We disbursed N42billion to the SMEs sector last year.

Over 500 SMEs participated in the First Bank’s maiden SMEs national conference last year, what was the significant achievement?
It was successful. What we achieved basically was to attract the real SMEs. All you needed to do was access our website and complete your registration, we did not have to be an existing customer. We invited three successful SME MDs. Mrs. Awosika, Managing Director of Chair Centre, somebody that started a furniture business with very little capital which today has grown into one of Nigeria’s largest furniture companies.

The Managing Director Sim Shagaya, someone that started an online e-commerce site which is very successful and Audu Maikori, music producer MD of Chocolate city. These are people who started small but today their stories have changed for the better. So we called them to address the conference and it was a huge success.

It brought hope to participants that it can be done and we also allowed them to interact among themselves and tell us what the issues of SME’s really are. It also helped us because we could use the learning to further twist our products and our services to suit the SME’s better the conference was held in Lagos and limited number of people attended, we went further to other cities like Aba, Port Harcourt, Kano and Ibadan.

We are now moving into states to make sure we gather more SMEs for business capacity building. What we are doing in those regional conferences is capacity building teaching them what to do to make their business bankable so that they can easily access finance from banks.


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