President of the Lagos Chamber of Commerce and Industry (LCCI), Toki Mabogunje has said the impact of the Micro, Small and Medium Scale Enterprises (MSMEs) as catalyst for economic growth is being threatened by lack of funding and credit.
She stated this during a financial webinar hosted by the LCCI’s financial services group on Thursday. The webinar themed “addressing the funding challenges for your business” was held to proffer funding solutions for business owners particularly the MSMEs through interactions between lending institutions and business owners.
The chamber president noted that out of the challenges business owners face, funding is a major problem as credit is not easily accessible; thereby constraining business activities.
“The global consensus that SMEs are crucial to economic development continues to be at risk as difficult access to affordable finance and funding continues to impede the growth of the sector,” Mabogunje who was represented by Gbenga Ismail vice president, LCCI said.
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She noted that over the years the Federal Government and the Central Bank of Nigeria (CBN) have made efforts at providing funding through the establishment of various credit schemes, loans, and intervention funds structured for critical sectors in the economy, especially the SMEs business category.
However, these businesses struggle with the risk assessment criteria of commercial banks and other lenders due to poor accounting records, failure to provide required documentation, inadequate collateral, weak governance structure of the business, cashflow rigidity among other issues.
Furthermore, the outbreak of the Coronavirus pandemic aggravated the problems of these businesses as the global and local economy experienced a meltdown, which primarily caused Nigeria’s slip into a recession in the third quarter of the year.
She added that although Nigeria exited recession in the fourth quarter of 2020, it did not imply an end to the country’s economic woes as weak employment, depressed purchasing power, weak investor confidence among other issues has persisted.
“Moreover, the tightening global funding, financial flows, and investing environment could diminish the fund-raising initiatives of Nigerian businesses on the global space,” she explained.
She urged financial institutions to help alleviate funding issues for businesses especially by making credit accessible and available. Mabogunje also advised entrepreneurs to properly document their business and financial activities to improve their credit score.
