400 SMEs, Cooperative groups in Imo suffer severe cash crunch

The apparent inability of Imo State Government to rally up things and fulfill its counterpart requirements and other conditionality’s to access the Central Bank of Nigeria’s (CBN’s) N220 billion Micro, Small and Medium Enterprises Development Fund (MSMEDF) as well as Bank of Industry’s (BOI’s) industrial development support facility has created a severe cash crunch situation for over 400 small and medium enterprises (SMEs) and cooperative groups in the state, for their business operations.

BusinessDay findings prove that throughout his first term administration (2011 to 29 May 2015), Governor Rochas Okorocha was unable to make moves to fulfill any counterpart requirements to accessing Imo’s dormant credits available at the CBN and BOI, a development the organised private sector in the state said, has seriously stifled SMEs and Cooperative Societies operations in the state.The outcome of all this, noted the Owerri Chamber of Commerce, Industry, Mines and Agriculture (OCCIMA), is that few or no jobs were created by the private sector in the state.According to Kevin Mbawuike, the president of Owerri Chamber of Commerce, Industry, Mines and Agriculture, more than 200 companies in the state have suffered severe funding challenges to either expand their businesses or undertake major turnarounds required for future growth.

This, the chamber president noted, has tended to negatively affect business performances and economic growth of the state.

Mbawuike, while speaking at OCCIMA’s second quarter (Q2 2015) general meeting and evaluation of business and economic performance of the state, said, 200 member-companies have suffered cash crunch, due largely to their inability to find interest-friendly loanable funds around.

A key reason for this sad development, Mbawuike said, is the Okorocha government’s failure to access the state’s idle credits at the CBN and Bank of Industry.

“We (OCCIMA) have been reliably informed that the Bank of Industry has idle cash for 200 companies in Imo State, but which cannot be accessed by these companies because our State government has not paid its counterpart fund required for BOI to release the credits to us,” the OCCIMA president said.

At the CBN, Imo, like 12 other states has been unable yet to draw down its N2 billion dormant cash from the apex bank’s N220 billion Micro, Small and Medium Enterprises Development Fund, of which N2 billion is allocated to each state by the CBN.

Ibrahim Mu’azu, the CBN’s director of corporate communications told BusinessDay last Tuesday in Owerri, on the sidelines of the CBN financial inclusion and payments system fair that “Imo State Government is yet to access its own N2 billion of the N220 MSMED Fund.”

Mu’azu informed that “the State government is still talking with the CBN on meeting up with the requirements to accessing the MSMED Fund.”

“So far, 23 states of the Federation have accessed the fund, amounting to N46 billion, with N2 billion per state,” he said.

He also informed that majority women in the country were yet to scratch the 60 percent allocation of the MSMED Fund, which was kept for women to go into business.

On its own part, the South East Cooperative Financing and Investment Limited (SECoopFIL) has said over 200 cooperative societies in Imo State have not been able to access any of the credits of the BOI and CBN, such as the MSMED Fund, Agricultural Credit Guarantee Scheme (CBN-ACGS) and industrial development credit facility.

Geoffrey Samuel, national vice president of Cooperative Federation of Nigeria (CFN) and president of SECoopFIL, told BusinessDay that the major impediment against the 200 cooperative societies stem from the state government’s inability to step down the bulk CBN and BOI funds, which would make it easier for them to access.

Among other requirements, the State government is supposed to create a special purpose venture (SPV) agency that would undertake the disbursement of the MSMED Fund to SMEs, after accessing from the CBN.

So far, none of such SPV has been created in Imo, given the Governor’s inability yet to form his cabinet over six weeks after being sworn-in.

Samuel told BusinessDay in an interview that efforts so far made by their cooperative groups (mainly women) to access the CBN’s MSMED Fund have proved herculean, as the conditions stipulated by the apex bank are quite stringent.

“To access the CBN’s MSMED Fund, as a cooperative, we were asked to go through a deposit money bank (otherwise called commercial banks). Meanwhile, the commercial banks have required us to provide collaterals.

The Cooperative Federation national vice president called on Governor Okorocha to expedite action to get the State government access the MSMED Fund for the benefit of thousands of Cooperative groups and SMEs in the state.

For Mbawuike, the OCCIMA boss, the governor must take a firm position to support businesses in the State through policies such as freeing access to BOI’s industrial development support fund and CBN’s MSMED Fund, so as to create an enabling environment that supports the private sector initiatives.