“SMEs, A Timely Antidote To Nigeria’s Economic Growth”

Posted by African Examiner Business News, Latest Headlines Tuesday, February 24th, 2015

The present business climate in Nigeria has been described as the best time, to support the SMEs, as the survival of the economy depends largely on retail businesses.

The Managing Director, Heritage Bank, Mr. Ifie Sekibo said this during the launch of new SME Finance Package – Paris Klub SME (PKS) Scheme.

While speaking on the rising tide of the challenging economy and the plight of an estimated 17 million Nigerian SMEs out of which only about 10 per cent have access to finance, Sekibo noted that to improve the dwindling fortune of the country’s economy, a robust SME business environment must to be developed.

“This is why we introduced the Paris Klub SME (PKS) Scheme to support lending without core collateral. We take pride in our hybrid solutions where borrowing customers gain access to more value added services including consulting, business tools and technology. What we have done is to bring up an innovative idea of how to finance SMEs without collateral. Once we identify the SMEs, we offer advisory services to them, we help them to structure their businesses and also with their cash flows”, he explained.

The Bank he added, was currently developing a sponsored interest scheme for the educational sector where educational institutions could borrow at low rate subsidized by the scheme manager, adding “We are also discussing partnership programs with Venture Capital Firms to introduce debt-equity financing option”.

Speaking further, he noted that one major reason why banks were not funding SMEs was because of the risk involved.

“A high perceived risk of lending to the largely unstructured SME Sector is a major issue. More efforts and resources are generally required to effectively monitor loans to SMEs which may result in eating into the bottom-line. In addition, Banks also have different risk appetite.”

Speaking on the new SME Scheme, the Bank’s Group Head, SME, Mr. Bayo Ogunnusi noted that Heritage was working on several other sector-specific finance schemes in its quest to make SME financing simple. He specifically mentioned the agric sector where a large chunk of the nation’s SMEs operates.

Ogunnusi affirmed that with the ongoing integration of the recently acquired Enterprise Bank with about 160 branches and 400 points of presence, which include ATMs and mini kiosks across Nigeria into the Bank’s network, the capacity to grow the retail business sector would be properly enhanced.