Financial experts have advised against the constant emphasis and clamour for access to finance by Small and Medium-scale Enterprises.
The experts, who include a former Deputy Governor of the Central Bank of Nigeria, Prof Kingsley Moghalu; and a professor of Economics at the University of Lagos, Olufemi Saibu, said there were other important things that the SMEs needed to worry about other than access to finance.
According to Moghalu, access to finance is the greatest obstacle of business, but not the most important.
He argued that 90 per cent of the funds made available to SMEs were from banks, which he described as wrong, saying it was a major cause of economic problems.
He stated that the Nigerian banking industry lacked the necessary depth to power the economy.
Moghalu said, “Statistics show that investments in small firms create more jobs than corporate entities. Nigeria needs more structural reforms other than creating finance, because even the finance is not cheaply made available.
“Banks incur lots of expenses; take for example a bank branch that runs on generating sets all through. These are significant costs that cannot be borne by the bank alone. The bank will surely transfer some of them to borrowers, hence the high interest rates.”
He added that while pressure was being mounted on the government to improve economic policies, the SMEs ought to focus on wealth creation through intellectual property and technical skills.
According to Saibu, most of the people clamouring for finance are trying to make cheap money.
He said over the years, funds had been thrown into problems that were not money-related.
“I work on SMEs so much and I have carried out a lot of studies on them. What I observed is that most of these people going into SMEs lack the technical know-how. They lack the expertise of the businesses they are going into. Even the ones that have access to finance record a high mortality rate,” Saibu added.
He stated that there was a need for a critical analysis of key sectors to ensure that SMEs possess the needed skills to survive.
He added that the CBN and the Bank of Industry always argue that money released for SMEs lay idle and unclaimed because the simple conditions required to obtain them could not be met.
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