Merit Ibe
Members of the Nigerian Organised Private Sector (OPS) have urged banks to willingly release the Central Bank of Nige ria (CBN)’s intervention funds to Small and Medium Scale Enterprises (SMEs) operators rather than being wary of the risk of repayment and payment of penalties for the non-release of the funds to the target market.
The CBN intervention funds to SMEs operators is in line with achieving its 80 per cent financial inclusion target by 2020.
According to Mr. Idowu Bakare of Lagos Chamber of Commerce and Industry and the Managing Director, CYWE venture International Limited, Mrs. Nwanmaka Okeke, the only way to achieve the Federal Government’s 80 per cent financial inclusion penetration target lies with the country’s commercial banks, as they are expected to change their perception about SMEs and recognise the key role they play in boosting the economy.
Speaking in Lagos, Bakare explained that the private sector is worried with the slow pace at which SMEs get loans especially the CBN’s N220 million and other intervention funds meant for them through the commercial banks because of the high risk in loan repayment in spite of the apex bank’s willingness to support their businesses.
He said the chamber’s findings revealed that the commercial banks are still being reluctant to grant the CBN intervention funds meant for the real sector of the economy to the SMEs because of risk of default and prefer paying penalties to the CBN for deliberately withholding the funds or channeling them to other areas at the detriment of giving the SMEs to use to run their businesses.
Bakare said: “I and others have researched extensively to know why money is not getting to the hands of SMEs in this country. One obstacle we discovered based on our investigation is that the money is actually being released by the CBN and the Federal Government to the commercial banks because they are the ones that will carry the risk of the money when they pay back to the CBN. But now, they prefer to pay penalties for not releasing the money than giving it out to the Nigerian SMEs, so the purpose of such loans is not realised. I will urge the Minister of Industry, Trade and Investment to make an impact and ensure that these bottlenecks are broken once and for all to allow genuine SMEs to have access to these monies so that their businesses can thrive. By that small farming can also thrive in this country.”
In her submission, Mrs. Okeke explained that SMEs are suffering in the hands of Nigerian banks who have made up their mind to stifle them of funds by not releasing the loans because of default, saying this is fueling high cost of production and inflation in the country.
“SMEs have challenges with accessing funds in Nigeria because banks are not looking at our faces. They call us risk personnel. They can’t take risk on you, they cannot try it and before you know it, they force us to start opening many accounts. As I am standing here, I have six accounts with zero money in most. They will come and brainwash me, tell me sweet things, I will open account that ends there and another one would come brainwash me again, I will open. So, the banks are not helping us. I can categorically say to you that many SMEs had gone under because of loans and high interest rates payment.
“You can see the multiplier effect in terms of high logistic costs and getting our goods across are expensive, getting our raw materials across to us is expensive, getting your raw materials from the markets to your office is expensive and these increase our cost of production and that makes our cost of production expensive than normal conventional products in the market.”
She enthused, “why our products are expensive is because we are SMEs as the price we put in to buy these raw materials from companies or markets and move them to our factory sites is high, and most of us are using rented apartments as factory sites, we don’t have permanent sites.”