SMALL and Medium Enterprises (SME’s) are the engines of free enterprise economies. The SME sector leads others in employment generation and even sustains large-scale enterprises. All the blue-chip companies and multinational corporations we have today were once SMEs.

In Nigeria, the greatest bane of the SME sector is a lack of access to funding for their survival and growth. Thus, the mortality rate has been over 95 per cent; one of the highest in the world.

The issue of poor infrastructure is a major hindrance to economic activities in Nigeria but it is well known that SME’s do better than large scale organizations in navigating and coping with this malady, the only difference being the financial resources available to the latter to grapple with the problem.

The Central Bank of Nigeria (CBN) had set up special intervention funds worth over N1.3 trillion in the last five years, with SMEs alone allocated about N600 billion. In addition, the Bank of Industry (BoI) has created several SME-targeted funds worth hundreds of billions of Naira, while the Federal Ministry of Finance had equally floated the YOUWIN program with N50 billion SME grant.

In all, over a trillion Naira has been provided by the various government agencies for lending to SME’s within the past five years.

It is amazing that despite all these special intervention funds the SME sector is still reeling in funding crunch. A recent SME sector report indicated that less than five per cent of these funds have so far reached the SME’s. This means that the impact has been less than five per cent; a remarkable failure.

Stakeholders and financial analysts have blamed the failure partly on the weaknesses of the SMEs themselves as formal business entities. Mainly, they are said to be lacking in structure, financial management and bereft of assets for loan collateral.

With a consensus reached across all divides on the need to have a strong and vibrant SME sector, we advise that a fraction of all the funds should be used in promoting Business Development Service Providers (BDSPs), a group of certified business consultants to help create the structures and impart financial and other business management standard practices to help the SMEs meet standard requirements for loans whether through banks or special funds.

The services of the (BDSPs) should come at no cost to the budding SMEs.

We also call upon the government and the organised SME groups to build a special-purpose loan securitisation framework for SMEs which have demonstrated prospects and capacity in their lines of business.

The overriding principle should remain the security of public funds deployed to this sector. SMEs need help to grow, so let us help them.