By Victoria Ojeme
The Bank of Industry ( BOI) , Small and Medium Enterprises Development Agency of Nigeria ( SMEDAN) and Nigeria Export – Import Bank ( NEXIM) have hired the services of rating agency – Dun & Bradstreet Nigeria Limited to conduct ratings on Nigeria’s Micro, Small and Medium Enterprises ( SMEs) in the country.
A memorandum of Understanding ( Mou) authorising the rating firm to conduct due diligence analysis on all existing SMEs in Nigeria, was signed Thursday in Abuja by BOI , SMEDAN and NEXIM Bank with the rating agency firm- Dun & Bradstreet Limited.
Currently, Nigeria has over 37 million SMEs with most of them, adjudged unviable due to challenges which include, lack of access to finance , poor infrastructure which make SMEs susceptible to early moribund.
Minister of state for industry, trade and investment Hajiya Aisha Abubakar presided over the signing of Mou in Abuja.
She lamented that SMEs sector is beset with numerous challenges , most especially access to finance . She was confident that the coming of rating agency is a good development that will spur SMEs growth in Nigeria. ” Access to finance has been an age long challenge to MSMEs and despite the various interventions put in place to facilitate funding for this sector, little impact is made on the expansion of these enterprises”.
” The proposed credit rating agency will compliment this effort by providing an objective opinion on the potentialities and credit worthiness of MSMEs. A rating agency typically should design scoring solutions for SMEs, typically A, B,C,D, E etc.
Financial institutions will use this rating to decide the kind of relationship they will develop with the SMEs in granting loans such as the amount to be granted, the price ( rate of interest) it will agree upon and the level of security/ collateral required, if any.
We strongly hope that this will not incur additional costs and bureaucracy to accessing finance by MSMEs”, said the Minister. While lauding the efforts of three government agencies in coming up with the novel idea, the Minister said that, the creation of specialized and effective enterprise rating platforms was intended to reduce the turnaround time in accessing funds by MSMEs and other critical resources.
” So it’s a deliberate effort to have invited all stakeholders here at this roundtable to mutually discuss the viability and also provide an opportunity to harvest inputs that would facilitate the seamless commencement and operations of a rating agencies “, noted the Minister.
In his remarks, BOI Managing Director Mr . Kayode Pitan described the decision by three agencies to engage rating agency to conduct due diligence analysis on all SMEs as very important. Pitan noted that, with over 37 million SMEs in the country, contributing 48.9 % to the GDP, it remains a sad development that the sector got paltry 0.29% of the total loan granted by financial institutions.
He said banks have problem when it comes to extending finances to SMEs sector .
Pitan said banks reluctance to intervene in SMEs sector stemmed from various reasons, key being high risk nature of their businesses.
However, he expressed assurance that with rating agency now in place to conduct due diligence analysis on them, banks fear would be removed.
Earlier in a welcome remark , Director General of SMEDAN Dr. Dikko Umar noted the inevitable role of SMEs as catalyst for economic development of every nation. He noted that SMEs in Nigeria are moribund more in their numbers due to various challenges confronting them.