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Enhancing Financing Opportunities for SMEs in Nigeria.

Eme Essien Lore is the Country Manager at the World Bank Group – IFC. She was a guest on the SME Forum and we had an interactive session on financing opportunities for SMEs.

At the start of the show, she said that, “Access to finance is a big challenge to SMEs in the developing markets, especially in the Nigerian market due to the country’s low credit GDP. Closing the finance gap for SMEs is a policy priority for public and private sectors players especially in developing economies around the world.”

The Nigerian economy is made up of mostly informal businesses, which represent over 80% of the entire labor force, thus it is of utmost importance that SMEs are financed in order to ensure the security of this labour force.

Without further ado, she briefly spoke about the IFC directly – The International Finance Corporation (IFC) is a member of the World Bank Group that offers investment, advisory, and assets management services to the private sector in developing markets to help them contribute to their country’s economy policy agenda.

Here are some things she spoke about in regards to their activities in Nigeria:

  • The IFC is addressing the funding issue for SMEs by working with Commercial Banks and Microfinancing Institutions by providing them funds, which they in turn on-lend to SMEs. These funds also come in form of a variety of range of products that focus on diverse sectors such as: energy and power, agriculture, technology etc. In addition to funding, IFC also provide advisory support to banks to enable them build capacity  to get the funding to their clients more efficiently.
  • Collateral has been a challenge to MSMEs in a bid to access funding. In a bid to salvage this, the World Bank has been working with the Central Bank of Nigeria to consider alternative collateral such as movable assets and the use of the collateral registry.
  • In 2017, the Federal Government enacted the Secure Transaction and Movable Assets Act to enable banks use movable assets as collateral. This made a huge impact in on the MSMEs that lack fixed assets to offer as collaterals.
  • The IFC is excited about the growth potential of the FinTech Industry in Nigeria. IFC is a long-term partner of FinTech companies and have invested more than $320 Million globally. IFC has also commenced equity investments particular in tech enabled firms and would have an increased focus on Nigeria. Hence, tech enable businesses should actively seek to reach out to the IFC via its various digital channels to be up to date with their funding programs.

In conclusion, she advised SMEs looking for access to finance from banks to recognize what will be required of them and have those things readily available. Also, as regards access to finance, business owners should understand that the financial institutions are not just interested in collaterals. It is important for things like the business vision, good governance etc. to be in place as this will make their businesses more attractive for funding.

Her recommendations were for

  • SMEs to “dig” a bit more to find out specific financial institutions collaborating with the IFC and other development partners. This is because they can access loans at lower rates from such financial institutions

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