Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) and the Manufacturers Association of Nigeria (MAN) are asking the government to cut interest rate in a way that small businesses can access funding.
They say micro, small and medium enterprises (MSMEs) create the most jobs and therefore should be supported with single-digit funds to enable them do more.
“Five percent interest rate would further stimulate the productive sectors of the economy, create jobs and provide new opportunities for the micro, small and medium enterprises (MSME) operators,” said Iyalode Alaba Lawson, president of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) .
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 OPS says Nigeria needs to cut the Monetary Policy Rate, which is the benchmark interest rate, down from 14 percent.
Frank Jacobs, president, Manufacturers Association of Nigeria (MAN), said what Nigeria needs now to recover fully is 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 said recently in Lagos.
Interest rates have continued to head north as the CBN retains the MPR at 14 percent.
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 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.
According to him, government now needs to open up access to various development funds created by the Central Bank of Nigeria (CBN) such as the N220 billion Micro, Small and Medium Enterprises Development Fund (MSMEDF) and the N300 billion Real Sector Support Facility (RSSF) by relaxing stringent conditions denying SMEs and manufacturers access to these funding windows.
ODINAKA ANUDU
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