First Bank remains passionate about supporting small businesses’ growth

Undoubtedly, First Bank of Nigeria Limited is passionate about helping small businesses grow on all fronts as it puts in measures to boost credit to Small and Medium Sized Enterprises (SMSEs), with a view to reviving the economy.

The lender recognises that the informal sector is pivotal to lifting millions of Nigeria out of the shackles of poverty, and the attainment of the desired economic growth.

To date, it has expended N170.30 billion as financial support to the SMEs, comprising the loans given to the segment irrespective of product type.

Over the last 3-7 years, the oldest financial institution in the country has supported 70703 small and micro businesses, while it continues to partner with government and big financial technology (Fintechs) companies to bring banking services closer to the people.

First Bank has been providing technology-enabled services and richer user experiences to petty traders. In turn, those firms can devote more time and energy to running their businesses.

SMEs as defined by the Central Bank of Nigeria (CBN) are economically independent companies with about 11 to 300 employees and an annual debit turnover of between N5 million to N500 million.

“First Bank has over the years, been at the forefront of supporting Businesses, especially the SMEs as we recognise that the SMEs are the engine of the economy,” said Gbenga Shobo, deputy managing director, First Bank of Nigeria Limited.

“We are committed to ensuring that we leave no stone unturned as we connect with them in their continued contribution to national development in terms of the employment opportunities they create as well as their contribution to the nation’s GDP amongst many economic values.”

Following extensive research by the First Bank over the years, it identified these seven strategic pillars to be essential for sustainability and growth.

These include, access to infrastructure, access to talent, capacity building, policy and regulation, access to resources, access to market as well as access to finance.

Lack of stable power supply from the national grid has been a major stumbling block to best new small business idea and artisans, who make up the informal sectors and a lot of them have closed shop because they can’t continue to spend money on fuel to run generators.

Stakeholders say the opaqueness of the nature of the venture makes it difficult for banks to extend loans to them. Also, the large chunks of operators in the informal sector do not keep proper books of account, making it difficult to ascertain their cash flows.

Despite these monumental challenges, the industry is paramount to the country, as it is the largest employer of labour, but experts have unanimously agreed that a lot needs to be done by government and the private sector in reviving it.

According to the Ministry of Industry, Trade and Investment, over 37.07 million, small and medium-scale enterprises, MSMEs, account for more than 84 percent jobs in the country.

The ministry further stated that about 48.5 per cent of the gross domestic product (GDP), as well as about 7.27 percent of goods and services exported out of the country.

Of the total number, micro-enterprises account for the bulk of the MSMEs in Nigeria, with 36,994,578 enterprises, about 99.8 per cent, while small enterprises took 68,168, and medium enterprises 4,670.

To help provide access to affordable credit facility, and diversify the country’s economic base, create jobs and improve micro-economic stability, the Central Bank of Nigeria (CBN) has helped 120, 290 smallholder farmers in about three states under the Anchor Borrowers Programme launched by President Muhammadu Buhari, creating more than 500,000 jobs in the process.

Earlier the year, FirstBank and Microsoft had partnered to provide supporting technology solutions at a discounted rate to over 40 million SMEs.

Shobo said that the aim of the launch encourage them to embrace technology in their operations.

Nigeria said that the target was to reach out to about 40 million SMEs and interested individuals.

“The SMEs can buy some of the Microsoft solutions at discounted rates, pay in naira as against the dollar, thereby removing the stress of exchange rate which is sometimes a challenge for the SMEs. They now have a portal where they can ask for advice on the products and some extra sales support we can also get Microsoft to give them,” he said.

“The SMEs segment is so important to the livelihood of many Nigerians, and we have seen that SMEs have the ability to grow.

One million new devices will be coming online in 2020 while 60 per cent of computing will be in public cloud in 2025 adding that 25 per cent of workers’ time is wasted by information overload, according to Microsoft.

To spur lending to the economy, the Apex bank has increased the Loans to Deposit Ratio (LDR) of Deposit Money Banks (DMBs) to 65 percent with a penalty of 150 percent of cash reserve ratio for defaulter, and the deadline to meeting the new regulation is December.

There are enormous responsible on the shoulders of Fintechs and banks to help pave the for small business to have access to the desired working capital that will in turn help them grow revenue, and, possibly, list the business on the capital market.

In developed markets, the gap between the capital SMEs need and the amount they actually received is equivalent to about 3 percent of GDP, according to Allianz. In developing markets, the gulf is 18 percent of GDP, which adds up to $4.8t in underfunding, according to the International Finance Corporation.

Africa continent has a huge to fill in the area of providing financing for micro businesses as they rely on traditional means to raising capital, this includes borrowing from friends, relatives, or the traditional corporative.

The International Finance Corporation (IFC) estimates that 65 million firms, or 40 percent of formal micro, small and medium enterprises (MSMEs) in developing countries, have an unmet financing need of $5.2 trillion every year, which is equivalent to 1.4 times the current level of the global MSME lending.

In Nigeria, the Development Finance Project supports the establishment of the Development Bank of Nigeria (DBN), a wholesale development finance institution that will provide long-term financing and partial credit guarantees to eligible financial intermediaries for on-lending to MSMEs. The project also includes technical assistance to DBN and participating commercial banks in support of downscaling their operations to the underserved MSME segment.

As of May 2019, the Development Bank of Nigeria credit line to PFIs for on-lending to MSMEs has disbursed US$243.7 million, reaching nearly 50,000 end-borrowers, of which 70 percent were women, through 7 banks and 10 microfinance banks.

Experts are of the view that Nigerian banks are instrumental to diversifying the economy away from the reliance on oil by extending credit to business without encumbrances since crude oil price has been unstable in the last five years.

Nigerians GDP expanded by 1.94 percent in the second quarter of 2019, this compares with 2.10 percent as at the first quarter of (Q1), according to the latest report from the National Bureau of Statistics (NBS).

Unemployment rate at 23 percent is one of the highest in the world while the country overtook India as the world’s poverty capital.

About First Bank

First Bank of Nigeria Limited (FirstBank) is the premier Bank in West Africa and the leading banking services solutions provider in Nigeria for 125 years. With some 15 million customer accounts, FirstBank provides a comprehensive range of retail and corporate financial services with over 750 business locations. The Bank has international presence through its subsidiaries, FBN Bank (UK) Limited in London and Paris, FBNBank in the Republic of Congo, Ghana, The Gambia, Guinea, Sierra-Leone and Senegal, as well as a Representative Office in Beijing.

Since its establishment in 1894, FirstBank has consistently built relationships with customers focusing on the fundamentals of good corporate governance, strong liquidity, optimised risk management and leadership. Over the years, the Bank has led the financing of private investment in infrastructure development in the Nigerian economy by playing key roles in the Federal Government’s privatisation and commercialisation schemes. With its global reach, FirstBank provides prospective investors wishing to explore the vast business opportunities that are available in Nigeria, an internationally competitive world-class brand and a credible financial partner.

FirstBank has been named “Most Valuable Bank Brand in Nigeria” six times in a row (2011 – 2016) by the globally renowned “The Banker Magazine” of the Financial Times Group; “Best Retail Bank in Nigeria” for seven consecutive years (2011 – 2017) by the Asian Banker International Excellence in Retail Financial Services Awards and “Best Bank in Nigeria” by Global Finance for 15 years. Our brand purpose is to always put customers, partners and stakeholders at the heart of our business, even as we standardise customer experience and excellence in financial solutions across sub-Saharan Africa, in consonance with our brand vision “To be the partner of first choice in building your future”. Our brand promise is to always deliver the ultimate “gold standard” of value and excellence. This commitment is anchored on our inherent values of passion, partnership and people, to position You First in every respect.