• Wednesday, February 21, 2024
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Lack of access to credit has stifled economic growth – Trade minister

Lack of access to credit has stifled economic growth – Trade minister

The federal government has identified poor access to credit especially for businesses as a major contributor to stifled economic growth in the country.

Niyi Adebayo, minister of industry, trade and investment said this while speaking at the National Workshop on Bankruptcy and Debt Collection in Nigeria, organised by the Nigerian Office for Trade Negotiations (NOTN) in collaboration with AELEX.

He noted that the credit system in Nigeria has been facing numerous challenges over the years with many businesses unable to access credit, due to finance scarcity, high interest rates and the stringent lending conditions that are often imposed by the banks and other financial institutions.

“The lack of access to credit has stifled economic growth, leading to a decline in investment and job creation, this is a trend that we have to reverse for greater interest of the national economy going forward,” he said.

He said outcomes from the workshop must be the institutionalisation of a vibrant and sustainable credit system in the country, which should sufficiently incentivise financial institutions to lend to especially Micro, Small and Medium Enterprises (MSMEs).

“This is critical to enhancing the overall competitiveness of the national economy, leading to increased productivity, economic growth and employment generation, as well as the promotion of entrepreneurship and increased benefits from the country’s participation in international trade,” he said.

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The Minister recalled that in March 2022, the Federal Executive Council, approved the proposal to establish the Nigerian Bankruptcy Commission with Debt Collection Offices in the 36 States of the federation and the Federal Capital Territory (FCT).

He said this commission was established to provide an effective legal and institutional framework to regulate business behaviour and also reduce the challenges associated with the enforcement of trade -debt contracts in the regular courts as the debt collection office would be equipped with the expertise, resources and specific focus to ensure that customers pay their trade debts on time.

“I have no doubt that if successfully implemented, the Commission and its Debt Collection Offices will not only be complementary to the ongoing reforms under the Presidential Enabling Business Environment Council (PEBEC), but also significantly contribute to the creation of a modern 21st Century credit-oriented economy for the benefit of producers, retailers and consumers in Nigeria,” he said.

He promised that the government will continue to take measures to promote financial inclusion by ensuring that all Nigerians have access to financial services, regardless of their income level or location as this will positively contribute to financial stability as well as enhance trade and economic growth.

Yonov Fred Agah, director-general/chief trade negotiator, Nigerian Office for Trade Negotiations (NOTN) in an interview said recommendations from the workshop can outline the regulatory and institutional framework for bankruptcy and debt collection which will help producers get credit for their production and consumers to get goods and pay later.

He said with this framework there will be definitive procedures on how loans can be recovered and how to manage risks as well.

“Even when a growing concern runs into trouble the priority as to how assets will be shared among creditors is clear so you either have a claim on a particular asset or at least you know that this can help you and you can even retrieve the goods while it is still being delivered to the creditor,” he said.

Soji Awogbade, head, Energy & Natural Resources practice group at ǼLEX, co-convener of the workshop said the meeting aims to see how credit can be innovated and energised to help producers and the growth of the market.

“The government regulates trade, financial service providers here will make presentations on the state of the credit industry in Nigeria and see ways we can expand the portfolio so there will be more economic activity and welfare for people,” he said.