CBN seeks stakeholders’ collaboration on adequate finance, infrastructure for MSME development

*The Central Bank of Nigeria restates commitment to fulfilling its developmental mandate through collaboration with stakeholders across infrastructure and Micro, Small and Medium Enterprises segments in order to boost domestic output, development and job creation in the economy

Isola Moses | ConsumerConnect

The Central Bank of Nigeria has restated the need for upgrade of the country’s critical infrastructure, including Information and Communications Technology (ICT), telecommunications, energy, roads and rail, transportation, water, sanitation and access to market, in order to enhance productivity and sustainable growth for businesses.

Mr. Godwin Emefiele, Governor of CBN, has also raised concerns that poor access to finance and lack of quality infrastructure continue to pose significant constraints to the growth of Micro, Small and Medium Enterprises (MSMEs) in Nigeria, agency report said.

Emefiele stated this in a keynote address at the recent 2021 Annual Conference and 30th Anniversary Celebration of the Finance Correspondents Association of Nigeria (FICAN) with theme, “Financing Infrastructure & SMEs for inclusive growth in the post-COVID-19 economy”.

The CBN Governor acknowledged that MSMEs have emerged as a significant source of growth, innovation and job creation, contributing 49.78 percent of Gross Domestic Product (GDP) in the country.

However, he noted that the limitations of poor access to finance and lack of quality infrastructure have impacted severely the economic growth as well as human development in the economy.

Represented on the occasion by Mr. Osita Nwasinobi, Director of Corporate Communications at CBN, Emefiele said that Nigeria’s infrastructure, such as ICT, energy, roads and rail, transportation, water, sanitation and access to market have to improve by at least between five and seven percent to stimulate productivity and sustainable growth for businesses.

Though countries in sub-Saharan Africa have been spending about 6–12 percent 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, said he.

Emefiele further stated: “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.”

According to him, the financing gap for MSMEs in Nigeria was estimated to be about N617.3 billion annually pre-COVID-19 pandemic.

Furthermore, less than five percent of these businesses have access to adequate finance to support their working capital and business expansion needs.

He also 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.

The governor, nonetheless, noted the CBN 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 Bankers’ Bank intervention efforts represented about 3.5 percent of the Gross Domestic Product (GDP).

Besides, Emefiele stated that the policy measures included a cumulative reduction of the monetary policy rate from 13.5 to 11.5 percent between May and September 2021; reduction of the interest rate on CBN intervention loans from 9 to 5 percent; 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.

CBN, therefore, says it remains committed to fulfilling its developmental mandate by collaborating with stakeholders across infrastructure and MSME segments in order to boost domestic output.

The CBN Governor added: “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 industrialisation.”