• Friday, March 29, 2024
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DBN says credit guarantee key to deepening MSME’s access to finance

FCMB signs $50m agreement to boost access to Finance for small, medium women-owned businesses
Industry experts have identified the Credit Guarantees Schemes (CGS) as popular policy instruments that would help alleviate the credit constraints faced by the Micro Small and Medium Enterprise (MSMEs).
The experts who spoke at the just concluded Development Bank of Nigeria Webinar session raised concerns that current realities of financial constraints faced by MSMEs, particularly on the back of the Covid-19 pandemic, and harped on the need for additional support in alleviating the growing funding crisis.
The main thrust of the discussion by industry experts at the virtual conference was “Risk Sharing: A Key Driver for Increased Financial Access and Economic Development for MSMEs”, a virtual knowledge-sharing series.
The DBN Webinar series is aimed at providing capacity building for MSMEs through digital platforms to ensure they are empowered to remain in business through this unprecedented period.
The experts alluded to the fact there is a need to increase awareness by key industry stakeholders in ensuring that the much-needed stimulus and alternative means of facilitating financing are discovered to stem the shock to Nigeria’s economic and financial system.
Ayodele Olojode, Group Head Emerging Business, Access bank Plc, explained that MSMEs do not have regular and sustained access to finance at high-interest rates, coupled with a lack of tangible collateral and economic conditions which have hampered their access to finance.
“Risk-sharing facilities will help increase access to finance which helps MSMEs grow, increases employment and output in the economy,” Olojode noted.
She further explained that the credit guarantee industry in Nigeria is still at a nascent stage, where the volume of guarantees and the size of the industry contributions to SMEs remain low compared to peers in other economies.
According to her, “Credit guarantee is the future because it will compensate for insufficient collateral, provide regulatory capital relief for banks, growth for MSMEs, increased economic GDP and job creation.”
Stressing the importance of risk-sharing among all stakeholders, Claire Omatseye, Managing Director, JNC International, said this would help eliminate financial oppression and predatory lending, while also ensuring prosperity is shared equitably.
But she noted that “In Nigeria, however, there exist some challenges with risk-sharing in the local market as most MSMEs do not fully grasp the concepts of risk-sharing and credit guarantees”.
“For the government, risk-sharing contributes to the realization of its economic objectives and stabilization policies”.
On economic growth challenges and the impact of COVID-19 in Nigeria, Senior Financial Sector Specialist, World Bank, Ahmed Rostom shared data from surveys carried out by the World Bank between April and March 2020.
The survey which highlighted the impact that the pandemic has had on the Nigerian economy indicated that 42% of individuals who were engaged before March 2020 especially in the hospitality and service industry are no longer working. Rostom said the situation was disturbing.