The recent pronouncement by the Managing Director of the Bank of Industry (BOI), Mr. Waheed Olagunju, that the bank would be disbursing N212billion in loans to micro, small and medium enterprises (MSMEs) before the end of 2016 is a very welcome promise that must be delivered within the stipulated timeframe. The measure will create millions of employment opportunities, reflate the sagging economy and significantly reduce import dependence for basic goods and services all in one stroke. It is an opportunity to turn the tide against the vicious circle of unemployment, poverty and rising crime rates.A survey by the National Bureau of Statistics in 2013 revealed that there are 37 million MSMEs in the country but 36.6 million of these are micro ventures such as barbing saloons, mechanic workshops, eateries, etc. If each of such enterprises employed just two workers, it means they provide employment for almost 80 million Nigerians or around 50 per cent of the countrys citizens. These figures also conclusively reveal that Nigerians are a highly enterprising people. Easing access to funds will not only enhance the existing businesses but lead to the creation of millions more MSMEs.We are compelled to make this call because previous programmes to provide funding for small businesses have been stalled by several factors including lack of political will, diversion of funds and cumbersome application processes. For instance, since 2012, the Central Bank of Nigeria (CBN) earmarked N220 billion for disbursement to MSMEs across the country under its Micro Small and Medium Enterprises Development Fund (MSMEDF). The CBN also organised a 12-week entrepreneurship training programme for potential beneficiaries.It is clear that the country is wasting valuable time and resources by withholding huge intervention funds for MSMEs on account of avoidable bureaucratic difficulties. Apart from the BOI and CBN schemes, there are dozens of development institutions at home and abroad whose planned aid for SMEs is snared in similar webs. Development finance by its nature is a risky venture but there are no gains without risks.Most MSMEs in Nigeria do have serious problems especially with accounts, book-keeping, transaction records and are plagued with poor management practices. Some of them are amateur one-man shows with no plans for continuity or growth. Others are even mere fronts for criminal enterprises such as armed robbery, car-jacking and kidnapping. These could all be overcome through proper screening and capacity-building on basic business skills.In our opinion, the major means of easing access to MSME funds is to eliminate the requirement for collateral. Considering the fact that most operators in this sector are youth with no working experience or property titles, this demand is largely unrealistic. It should be substituted with guarantees obtained from community, traditional and religious institutions to which everyone living in the country belongs.We are not saying that the BOI and other MSMEs financiers should give out loans indiscriminately to those who will be unable or unwilling to payback. We agree with Mr. Olagunju that the majority of enterpreneurs who apply for the loans have no intention of paying back. There should, therefore, be strict standards and regulations for accessing the funds. Such criteria including registration with the Corporate Affairs Commission, evidence of skill acquisition, community testimonial, track record, and so on must be clear, simple and realistic.Another way of easing the process is to coalesce the various streams into one consolidated fund. We, therefore, suggest that the CBNs MSMEDF and others such as the United Nations Industrial Development Organisation should be dissolved into the BOI finance window. The almost moribund Small and Medium Enterprises Development Agency (SMEDAN) should be re-engineered to process all applications, disburse the funds as well as mentor and monitor the beneficiaries.
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