• Friday, March 29, 2024
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Private sector canvasses low interest rate for SMEs to unlock growth

Access to credit is a key catalyst for MSME growth

Private sector players say only loans with single-digit interest rate can help unlock the growth of small businesses.

They say micro, small and medium enterprises (MSMEs) create the most jobs and therefore should be supported with low-interest funds to enable them do more.

“Five percent interest rate would stimulate the productive sectors of the economy, create jobs and provide new opportunities for the micro, small and medium enterprises (MSME) operators,” Iyalode Alaba Lawson, president of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), said in a recent statement .

According to the most recent Enterprise Baseline Survey conducted by the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), there are 37 million MSMEs in the country, contributing almost 50 per cent to the country’s Gross Domestic Product (GDP) and over 60 million jobs for Nigerians.

The CBN said in 2016 that banks’ lending to this category of business was less than four percent.

The private sector says Nigeria needs to cut the Monetary Policy Rate, which is the benchmark interest rate, down from 13.5 percent.

Frank Jacobs, former president, Manufacturers Association of Nigeria (MAN), had said what Nigeria needs now to recover fully was a single-digit rate of five percent.

“What we need is an interest rate of five percent. We believe that this is what can stimulate SMEs and manufacturing,” Jacobs had said in Lagos.

The average borrowing rate by real sector players in 2017 was 22.8 percent, representing 0.4 percentage point increase from 22.4 percent recorded in 2016, according to MAN.

Tony Elumelu, founder of Tony Elumelu Foundation, recently said that every $1 spent on SMEs generates $5.

“It is important to fast-track the recapitalisation of the Bank of Industry (BoI) to enable it to meet up with huge credit demands of the industrial sector,” Jacobs had said.

“It is critical to intensify the implementation of the Moveable Collateral Registry and Credit Reporting system which were recently passed into law,” he added.

 

ODINAKA ANUDU