By Chibuzo Ukaibe, Abuja
The Nigerian Bankers Committee (NBC) has underscored the need for requisite education and other capacities by operators of Small and Medium Scale businesses in order to enable the sector grow in Nigeria.
This assertion was made during a Webinar conference hosted by NBC over the weekend with speakers drawn from different business organizations.
With the theme ” Stimulating SMEs for growth” the gathering while disclosed that SMEs in Nigeria account for 92% of total business in the country, contributing 52% to the NGP.
They recommended a strong need for a blended approach and combined private and public government finance to help SMEs developed.
”There is strong need for capacity development for both investors in terms of creation of financial model and for the entrepreneurs to be investment ready for the opportunities when they come onboard”.
Speaking at the event, deputy director, Head of Customer Education, CBN, Chinyere Wobilorin, added that education of the customer is key in view of the need for any SME to sustain itself.
She said it is only education that can assist any SME to overcome challenges faced by it as having the right information and how to use it depends on the quality of information available at any point in time.
According to her: ”For us to understand what the CBN is doing for the growth of SMEs, I will quote Steven Harvey book which said ” It is better for us to seek to understand to be understood”. Since 1977, CBN has been conducting intervention funds but is it really impacting the way we want it? Growth is an increase. If it is, there are issues that makes us not to increase. It is not just about money or the loan. For us to sustain growth, we have to engage in development activities which the CBN is doing.
” And, for the SMEs, we encourage them to continue in education perhaps on how to write bankable applications. How effective booking keeping, how to save to invest in businesses, separate their needs from their wants, separate personal money from their businesses, general financial management and how to participate in professional organizations in webinar such as this one.
”They should try to engage in skill based training and to upscale themselves. It is for us to understand that lack of basic financial knowledge apart from money can impact on growth. We need to change our mindset and learn how to apply this loans we are here to apply and how to obtain it so that we can grow the economy.
On the essence of loans from the CBN, she stressed further that ” It is for it to encourage impact on the economy. It is for us to encourage diversification of the economy. And, to encourage export and save little foreign exchange earnings coming from oil”, she said.
The chief transformation officer and head of SMEs, Union Bank, Chidi Eleka, while addressing a question on plans his bank has put in place for SMEs to access credit facilities, said: ” We have tried to simplify credit appraisal for SMEs. Traditionally, banks used to ask for audited financials, analysis of bank statements before loan amount are approved for documentations.
” But, today because SMEs are small in scale and some of the records do not come at that level. Where efficiency is guarantee, one of the things we do at that level today is that we lend to SMEs based on their account statement. We consolidate their account activities and we use it to take a view of how much they can borrow and how much they are able to repay so that it wont hurt their business. So, to put it simply, if an SME comes to the Union bank to borrow money today, what we do is to aggregate the footprint of the business.
” Do a consolidation of all the account statement. When we have that in view then we are able to make a determination of how much they can borrow. One of the most important thing we look out for is that basic organization whether SME has the records of what it has been able to achieve over the years. Because really, lending is as easy as the records you keep and the track record that can demonstrate the performance of the records you keep. So, you have to keep it simple. The track records and how well they are kept. Then on the basis of that we can now support the business with working capital in terms of does the business needs money to buy assets to grow.“
On his part, the representative of Enterprise Promotion SMEDA and director in the organisation, Monday Ewan, said SMEs are very critical to the economy because they contribute to economic development and growth.
His words: ” SMESs need to grow so that economy can grow in order to stimulate their growth you need to tackle those things that inhibit their growth. One of them is access to finance. The CBN guest has clear the air on the issue. That access to finance is key. because there are pockets of finance you can have access to. The other challenge is having the skills to manage challenges when it comes.
” Skill is very important for you to be able manage and grow your finance. You need to have the skills. Even the off take arrangement is very critical because after having the finance and skills and you cannot sell nothing then you have achieved nothing. The market and finance must be combine in appropriate formula to be able to grow the business from small to medium to large enterprise.
” For SMEDAN, we are at the apex. Apart from the law establishing SMEDAN in 2003, we have operated about 5 plus form to make sure that we grow SMEs. We provide information because it is key. We the right knowledge you are able to do a lot of things in terms of how to start and scale a small business. Where to find money, equipment, work space and the rest needed to sustain the business initiative.
”We provide what we call business development service which include capacity building, appraisal services, mentoring, counselling, etc. This idea is to empower the small businesses to grow. You need to build your skill to be able to scale. From our experience in the industry, you cannot improve SMEs through individual SMEs. You are able to provide common facilities in terms of power, equipment, adversary services so as to enable to grow.
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