Government urged to create more Dfis for the SME sub-sector (1)

Stakeholders in the small and medium enterprises sub-sector of the Nigerian economy have continued to reiterate the need for a revolutionary approach to the plight of entrepreneurs as regards business development and access to equity funds.
Recently in an exclusive interview with Nigerian Association of Small and Medium Enterprises (Nasme) head of public relations and membership services, Mr. Nerus Ekezie, he advocated and drummed support for the establishment of more Development Finance Institutions (Dfis) as the available one is not sufficient to address the financial needs of the Smes spread out across the country.
He specifically called on the incoming government to pay more attention and re-engineer the Nigerian Bank for Commerce and Industry (NBCI) in the short term while machinery for model policy shift for the establishment of more Dfis should be put in process immediately.
A stakeholder in the sub-sector, Mr. Hakeem Missa (CTO) PrepaidNigeria solicits governments attention to the small and medium enterprises as they are the bedrock of any development in a country. He said Dfis should not be limited in size rather it should be a form of specialized banks for the different needs of the business economy. He observed that in developed countries, Dfis are used to promote and establish small businesses in increasing the wealth of the nations involved.
“For the sake of diversity, variety, you want multiple institutions to reach multiple kinds of people, in multiple places; there is not much benefit in consolidating these institutions. The sooner you consolidate them, the quicker you have a single kind of mission statement and that is not the goal, we are trying to build an economy,” he said. “An economy that has a variety of industries that can participate. Even if the niche industries someday have their own dedicated institution why not because they will be specialists in serving the needs of those industries. I do not believe in consolidating at that level”.
He said, “SME funds are administered very poorly, the administrators of the funds does not take into cognizance our own peculiar situation in Nigeria. When it started, it was very bad. I hope that because of the consolidation and reforms in the banking sector, this
would improved for the simply reason that banks really have to do business to make money as opposed to the early days when they were doing it just to fulfill federal government requirement on setting apart a certain percentage of their profit for this fund”. He noted that one will be surprise that most of these banks hold these funds in escrow. He however suggested that the real question that should be asked of these banks is not how much they are having in their SME funds but how much have they disbursed out of the SME funds?
Facts across banks have shown that very little percentage of the equity funds had been disbursed. It is hoped that with the consolidation of the banking sector, banks will have more of an incentive to really go out there and seek out real businesses that could benefit from these funds. Truly, this fund on paper is the best any country needs to move the economy forward.

By Adewumi Olumide