September 24, 2020

DBN: Experts advocate more capacity building for increased lending to SMEs

Development Bank of Nigeria

By Princewill Ekwujuru

Experts in business and finance at the Development Bank of Nigeria (DBN) Capacity Building Webinar have tasked financial institutions on the need to engage more Small Medium Enterprises (SMEs) in capacity building initiatives to develop their business expertise and provide them more access to finance.
They also emphasized the need for behavioural change amongst small business owners in Nigeria, tasking them to incorporate the knowledge acquired at the training sessions into their daily business routine to make them more attractive and loan worthy for banks. The DBN MSME Webinar which is the third in the series, is a capacity-building initiative aimed at building synergy between financial institutions, Micro, Small, and Medium Scale Enterprises, and other stakeholders to upscale their competencies and facilitate funding to this critical sub-sector of the Nigeria economy.

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In her presentation, Ms. Nwamaka Onyiuke, Independent Non Executive Director, DBN, explained that capacity development of SMEs will help them build the required structure for their business, aid their leadership development, help MSMEs scale up and ultimately help them to utilize their resources in the right way.
Speaking on the core of capacity building as a funding tool, Dr. Oladimeji Alo, Non Executive Director,DBN,  stated that banks need to know that the needs of the micro small and medium enterprises often differ depending on their scale. He stressed that it is in the enlightened self-interest of financial institutions to develop the capacity of MSMEs.
“Some of the financial institutions say they have the funds to lend but the SMEs are not coming for the funds. The banks need to know the special needs of the sector and, also know that lending to the sector is not plug-and-play. The banks do very well when they deal with highly structured organizations, but when they deal with the SMEs, there is a level of frustration because the basic things are not there. Therefore, when you develop their capacity and they do better, they not only create employment, they end up creating a bigger base of customers for the banks“ he noted.
On if the financial institutions are ready to place further emphasis on capacity building to facilitate more access to finance for SMEs, Ukaonu said though banks are profit-driven enterprises, capacity building for SMEs is a base that currently interests the banks and the majority of the banks are making a lot of effort in that regard.
She further explained that lending to SMEs is becoming data-driven, as collateral is being faced out of some loan segments.