A case for a Nigerian MSMEs finance forum

By Onoakpoma Ohimor

This piece was necessitated by a couple of media reports in relation to the financing challenge faced by the micro, small and medium enterprises (MSMEs) sector of the nation’s economy. I make a quick reference to two of such below:

The first was captured in Punch Newspaper of 6th May 2019 in which  vice president Yemi Osinbajo asked those present at the first quarter MSMEs Stakeholders meeting held at the Presidential Villa, Abuja to come up with suggestions on better funding for start-ups and MSMEs.

Another cognate media report in late 2018 was in relation to a statement credited to the Central Bank governor, Godwin Emefiele. He specifically challenged banks and other financial institutions to evolve creative solutions to solving the financing challenges facing MSMEs. 

Clearly, the above statements by two principal decision makers in the nation’s economy reflect their appreciation and importance attached to the MSMEs sector. Under the watch of the vice president as chair of the National Economic Council, quite a number of initiatives have been embarked on to transform MSMEs. Also, the Central Bank under the watch of its current governor has enunciated a number of interventions and programmes in relation to MSMEs than all of his predecessors. The duo doubtless have made positive impacts on MSMEs.

Nevertheless, the calls made by them in the referenced media reports simply underscore the huge gap and needs facing the MSME sector in Nigeria. With over thirty seven million enterprises employing over 80% of Nigeria’s workforce there appears to be no silver bullet to solving the financing needs among other challenges facing the sector.

There exist a number of programmes and initiatives much of which were initiated by the current administration aimed at addressing the challenges. The major drawback however is that most of these interventions currently exist in silos. Little and certainly not enough collaboration is being done among the many actors and stakeholders involved with MSMEs financing. Furthermore, much of the interventions have had little or no inputs from those most impacted by the challenge.

Another concern is that the existing programmes and initiatives tackling MSMEs financing have not been subjected to adequate public review. Very little data is in public domain with regards to their performance and what the interventions have achieved so far.

While no one should be in doubt as to the well intentioned objectives of the interventions and initiatives of the government and the CBN in particular, intentions and outputs can sometimes diverge. It goes without saying that a more collaborative approach will help elicit many more cogent and effective solutions and deliver greater impacts. It is based on this among other reasons stated below that a case is hereby made for a standing and permanent Nigerian MSME Finance Forum.

Among the many challenges confronting the MSMEs, access to finance, without doubt has received the most attention from governments both at the federal and state levels in addition to development and private sector organisations. This confirms the central place financing occupies. Some of the financing initiatives include the following:

– Central Bank of Nigeria N220 Billion MSME Fund

– Agriculture Credit Guarantee Scheme

–        Anchor Borrowers Programme

– Lagos State Employment Trust Fund

– Bankers Committee Agriculture and SME Fund

Added to the above are the public funds invested in MSME focused development finance institutions such as the Bank of Industry, Bank of Agriculture and the newly established Development Bank of Nigeria. From the above, it is evident that the MSME finance bandwagon is real. It also underscores the understanding of the vital place of MSME in economic growth and development.

As the impacts of the various programmes and initiatives continue to unfold, monitored reports both in media and within formal and informal groups such as business membership organisations (BMOs), seem to suggest their impacts are limited. Put in another way, the results so far, are a far cry from the need of this vital economic segment and our collective aspiration for inclusive economic growth and development.

Basis for a MSME Finance Forum

In view of the huge public funds invested in the various on-going financing schemes and against the background of the need and yearnings of the MSMEs segment and the larger economy, an in-depth review of the various interventions and programmes by relevant stakeholders will be most appropriate.

Furthermore and as stated earlier, the existing MSME financing schemes currently exist in silos without any meaningful collaboration among implementing agencies of government and adequate feedback from stakeholders.

Suggested objectives of the proposed forum

The overall objective of the proposed forum will be to provide a broad based platform for stakeholders’ review of the MSME Financing Environment and provide for policy inputs for fine-tuning existing programmes and shaping future interventions. In addition, the proposed forum will facilitate the achievements of the following, among others:

– Cross fertilization of ideas and experience sharing among various government agencies, private and non-governmental organisations involved in MSME financing

– Continuing and on-going consultations that will provide inputs for future programmes and initiatives on MSME financing.

– Platform for extensive consultations with all stakeholders including financial institutions (bank and non-bank) MSME groups and business membership organisations (BMOs)

– As against working with some select players in the MSME financing environment, the proposed forum will provide government and development partners a platform to engage on national basis with stakeholders.

– The proposed forum will be a repository for inputs from all relevant parties as regards MSME financing.

The proposed Forum is not intended to be a one-off talk shop but a permanent broad-based platform for collectively confronting the challenges relating to MSMEs financing, pushing  existing boundaries and ultimately unleashing the segment potentials.

I have no doubt as to the strong interest and focus of the vice president and the Central Bank governor on MSME financing and the giant strides already made. The key concerns going forward should be consolidating the gains already made and providing a platform that will take the MSMEs financing agenda to the next level whereby a solid foundation is laid and the gains and legacy outlives the current administration.

The modalities and workings of the proposed forum will have to be agreed by all stakeholders.

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Onoakpoma Ohimor can be reached via oohimor@gmail.com

• Onoakpoma has over twelve years banking and finance experience. He has held business development, marketing and credit roles in First Bank Nigeria Plc and Intercontinental Bank Plc (Access Bank). In his last position, he led and was involved in the review, approval and management of big ticket transactions in the oil and gas sector including syndications and club deals. He holds a second class upper Chemistry and Master of Business Administration degrees from the University of Lagos. Onoakpoma was a Petroleum Technology Development Fund scholar and holds a Masters in Energy Finance from University of Dundee, Scotland, UK. Onoakpoma is an Associate Member of the Association of Chartered Certified Accountants (UK).