Dangote calls for more funding for SMEs

Dangote calls for more funding for SMEs

Richest man in Africa and the president of Dangote Group, Aliko Dangote has called for more funding to the small and medium scale enterprises (SMEs) for the purpose of stimulating economic growth and development.

SMEs are of critical economic importance, because they are the engines of growth and development for most developed, emerging and developing countries of the world. Lack of finance in the appropriate forms can constitute serious obstacles to growth and development in the sector and consequently, hampers their significant contributions to the economies of the country.

Operators in the Nigerian real sector now have added to their infrastructural and operating environment challenges, the burden of higher interest rate, driving their costs up.

With interest rates at the commercial banks hovering around 25 per cents, how many SMEs can afford such funds. Special intervention funds have become essential so as to provide cheaper funding for entrepreneurs in the country especially as financing has always been chief on the numerous list of various challenges facing Small and Medium Enterprises (SMEs).

The Dangote Foundation has what is called Dangote Foundation/BOI Fund, a N5 billion matching fund, which could be accessed by Enterprises and Limited Liability Companies engaged in the Manufacturing, Agro-Processing and Merchandising sectors for made in Nigeria goods, with single obligor limit of N50 million with an interest rate of five per cent.

According to the Nigerian industrialist, the funds are expected to impact directly on up to 13,000 registered groups in the country. Each group shall have an average of 20 entrepreneurs, this impacting the lives of up to 250,000 micro-entrepreneurs through job creation, spreading across all six geopolitical zones in Nigeria.

Recently in a chat with newsmen, Dangote said the best way to create jobs and increase the standard of living of Nigerians is for the Central Bank of Nigeria (CBN) to effectively fund the sector that is known as the engine for growth.

He said, “The apex bank should also step up its interventions in the area of improving funding for small and medium scale enterprises (SMEs). This will create jobs and raise the standard of living of the people.”

Bemoaning the high rate of unemployment in the country, he said effective funding of the small and medium scale enterprises will drastically reduce the high rate of unemployment in the country.

According to him, unemployment arises basically because job opportunities are not being created fast enough to match the ever-increasing work force. This is one of the effects of many years of de-industrialization in the country. Retrenchment both in the public service and the private sector also continue to exacerbate the unemployment crises.

Quoting a United Nations (UN) report, Dangote said youth unemployment rose to 42 percent in 2016 with many graduates combing the streets in major cities such as Lagos, Kano, Abuja and Port Harcourt in search of often-elusive white-collar jobs while for some who are employed, their situation can best be described as that of under-employment, as they are underutilised and poorly paid.

This development, posited, no doubt, has serious security implications, as evidenced by the high rate of social ills plaguing the nation. “The spate of kidnappings, intermittent vandalism of petroleum pipelines in the Niger Delta, and the protracted insurgency in the North East, are all fuelled, to a large extent, by the high level of endemic poverty in the country.”

Dangote pointed out that the current economic recession has further worsened the situation, as the Government continues to record dwindling revenues thus making it increasingly difficult for the Government to fulfil some of its obligations to the people.

As the chairman of the National Committee on Job Creation, which was set up in 2010, to address the unemployment situation in Nigeria, Dangote said he worked closely with my committee members to identify priority areas for job creation.

Some of these areas, according to him, include micro, small and medium scale enterprises (MSMEs), agriculture and agro-allied industries, manufacturing, entertainment and vocational skills. He said, “I believe we can create new opportunities for MSMEs by linking them up with larger enterprises, through industry clusters. Since a large number of employers in the MSMEs sector are informal family-owned businesses, they can be trained to become more proficient through various capacity building initiatives.”

Meanwhile, the Central Bank of Nigeria (CBN), recently said the funding gap in the small and medium enterprises (SMEs) sector is about N9.6 trillion.

Recently, the director of Communications of CBN, Ibrahim Muazu, however, expressed CBN’s commitment to bridging the huge gap, adding that the N220 billion intervention fund for Micro Small and Medium Enterprises (MSMEs) instituted by the CBN is a part of the commitment to that effect.

The CBN’s spokesman also noted that a maximum of 10 per cent of the commercial component of the fund is being channeled to trading and commerce to ensure that productive sectors of the economy continue to attract more financing necessary for employment creation and diversification of the country’s economic base.

“The broad objective of the N220 billion MSMEs fund is to channel low interest fund through participating institutions like banks and microfinance banks, state governments and small businesses that need it to create jobs and empower grassroots population,” he said.

The policy interventions has been urged to make access to financing easier for small enterprises, this will not only fast track their growth into medium and large enterprises but will also increase their capacities, in production and provision of employment opportunities to massive number of youths that are presently unemployed.

Advertisements

4 Comments

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.