SME funding boost yet to yield desired result, says CBN

The combination of the private and public sector Small and Medium Enterprises (SME) financing efforts have not yielded the desired impact, the Director of Development Finance Department for Central Bank of Nigeria, Mr. Paul Eluhaiwe has said. Eluhaiwe, who spoke at the Annual General Meeting of Nigerian Association of Small and Medium Enterprises (NASME) in Lagos, attributed under development of small enterprises in the country to high interest rate and high cost of doing business. Other factors he said, include lack of capacity to package bankable projects and credit rationing behaviour of banks in favour of other sectors such as oil and gas and capital market.

The National President of NASME, Alhaji Garba Ibrahim pointed out that small firms’ value added per worker fell below $3,000 in contrast to large firms at $7,600, while domestic firms stood at $2000 against foreign firms, which is above $12,500. According to him, the overall inefficiency in the business environment imposes a huge indirect cost on manufacturing in Nigeria at over 10 per cent of sales, which is twice as high for firms in the country as they are for firms in South Africa, Brazil, Russia And Indonesia.

He said that the contribution to the Gross Domestic Product of services sectors is encouraging but are they signs of real emerging sectors with a capacity of creating jobs. Garba noted that the official unemployment rate has steadly risen from 12 per cent in 2006 to 21 per cent in 2010, saying that the National Bureau of Stastics definition of unemployment as less than 39 hours worked in the past week, is unusual and is therefore not comparable to other countries.

The Managing Director of Nigerian Export-Import Bank (NEXIM), Mr. Roberts Orya, described the challenges to higher risk associated with small enterprises which operate in a more competitive environment and their lower capacity to withstand adverse developments in the economy.

He implored small traders and large export merchants to partake in the newly introduced ECOWAS Trade Support Facilitate (ETSF), which is designed to deepen Nigeria’s trade and help small exporters expand their businesses as well as taking them to the formal sector.

The representative of Bank of Agriculture, Alhaji Mohammed Santuraki reiterated the need to promote small enterprises, adding that two products targeted at youths and women have been developed and N60bn has been set aside for the project.

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