The Central Bank of Nigeria has expressed worries over the poor access to finance and lack of quality infrastructure that continue to pose significant constraints to the growth of Micro, Small, and Medium Enterprises (MSMEs) in Nigeria.
The Governor of the CBN, Dr. Godwin Emefiele, acknowledged that MSMEs have emerged as a significant source of growth, innovation and job creation, contributing 49.78 per cent of Gross Domestic Product in Nigeria.
He said that the constraints of poor access to finance and lack of quality infrastructure have impacted severely on economic growth, as well as human development.
Emefiele who was represented by the Director, Corporate Communications, Mr Osita Nwasinobi, spoke in a keynote address at the just concluded 2021 Annual Conference and 30th Anniversary Celebration of the Finance Correspondents Association of Nigeria (FICAN) with the theme, “Financing Infrastructure & SMEs for inclusive growth in the post-COVID-19 economy”.
The CBN boss said that the country’s infrastructure such as ICT, energy, roads and rail, transportation, water, sanitation and access to the market, have to improve by at least between 5 to 7 per cent to stimulate productivity and sustainable growth for businesses.
He noted that though countries in sub-Saharan Africa have been spending about 6–12 per cent of their GDP annually on infrastructure, Nigeria has been projected to need US$100 billion in investments to fix its infrastructural gap annually for the next 30 years.
“Beyond infrastructure, access to finance remains one of the biggest threats to MSME development in both developed and developing economies alike, with serious implications for productivity, economic development, and job creation,” he added.
Emefiele said the financing gap for MSMEs in Nigeria was estimated to be about N617.3 billion annually pre-Covid-19 pandemic. Furthermore, less than 5 per cent of these businesses have access to adequate finance to support their working capital and business expansion needs.
He identified other constraints to MSME development in Nigeria as difficulty in finding customers, insufficient cash flows, multiple taxations, regulatory burden, and sub-optimal implementation of the provisions of the MSME policy.
He said the CBN had made some efforts at boosting the economy by coming up with some policy measures that will stimulate investments towards the development of small and medium enterprises (SMEs).
He said the CBN’s intervention efforts represented about 3.5 per cent of the GDP.
The policy measures included a cumulative reduction of the monetary policy rate from 13.5 to 11.5 per cent between May and September 2021; reduction of the interest rate on CBN intervention loans from 9 to 5 per cent; a 1-year extension of the moratorium on principal repayments for CBN intervention facilities and targeted credit disbursement of N134.57 billion to 38,140 projects in agriculture, cottage industry, manufacturing, services, amongst others.
The CBN says it remains committed to fulfilling its developmental mandate by collaborating with stakeholders across infrastructure and MSME segments in order to boost domestic output.
“There is an urgent need for fiscal authorities to collaborate with the Central Bank of Nigeria to change the lenses through which they look at MSMEs and infrastructure development by developing innovative policy measures to unlock the potential of these enterprises to drive innovation and industrialization,” the CBN Governor said.