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Coronavirus: SMEs find solace in CBN’s interest rate reduction, N50bn facility

…call for transparent implementation

Operators of small and medium enterprises (SMEs) in the country have lauded the central bank for its interest rate reduction on intervention funds from nine to five percent and the N50 billion facility meant to help those hit by the effect of the novel coronavirus outbreak.

The operators say that the measure is the right step and will help businesses survive the difficult moment of the outbreak and low oil prices.

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“It is a very initiative from the central bank, especially now that the coronavirus impact is greatly felt by businesses in the country,” said Femi Egbesola, national president, Association of Small Business Owners of Nigeria (ASBON).

“The problem is implementation and ensuring that SMEs are the ones accessing the fund, and it would not be politics as usual,” Egbesola said.

He noted that most previous intervention facilities similar to this never got to the operators of small businesses but were usually hijacked by politicians for their selfish interests.

He stated that if there was transparency in the disbursement of the funds, it would be the best thing the government had done.

Since December when the outbreak of the virus was reported in China, it has spread to 166 countries with over 200,000 cases and 9,000 deaths. Nigeria, Africa most populous country, has reported 12 cases of the coronavirus.

To contain the pandemic, cities and regions across in Europe and Asia have been shut down, halting economic activities and obstructing supply chain as well as trade between countries.

Many SMEs operators in Nigeria are feeling the heat as they rely for imports for their raw materials used in production.

In a move to protect them from the economic disruptions amid the coronavirus spread, the country’s apex bank announced a N50billion facility through the Nigeria Incentive –Based Risk Sharing System for Agricultural Lending (NIRSAL) microfinance bank for households and Small and Medium-sized Enterprises (SMEs) that have been hit by the COVID-19.

“It is a good intervention especially with the coronavirus. The one moratorium and interest rate slash will help protect SMEs in the country,” said Degun Agboade, president and chairman of council, Nigerian Association of Small and Medium Enterprises (NASME).

“Lots of us are currently finding things difficult now as we cannot import the raw materials we need for production from China because of the virus but these interventions will help cushion the effect,” Agboade said.

However, as the apex bank continues to roll out palliative policies for the various businesses, there are questions around how the businesses will manage, especially the MSMEs that engage actively in wholesale and retail trade.

There are concerns on currency stability, and disruption to global supply chains remains critical despite the slowdown in the spread of the disease in China which might improve the latter.

A national survey of MSMEs conducted by the National Bureau of Statistics (NBS) in 2017 shows that the country has 41.5 million MSMEs scattered across various sectors. The data also affirms that about 73 percent of these MSMEs fully engage in wholesale and retail trade activities with China as a principal partner.

Bongo Adi, a Lagos-based economist, said this was a bleak period for many companies, especially the MSMEs, because no country had been able to arrest the virus neither did anyone know when it would be over.

“MSMEs will experience a bad period because no one has been spared from the hit of the virus. It is going to cause a vicious cycle as people are apprehensive and very soon will refrain from buying, and this will affect the sales of these businesses and their revenue as well,” Adi said.

 

Josephine Okojie and Gbemi Faminu

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