Medium Scale Enterprises, SMEs
By Dirisu Yakubu
The Nigerian Bankers Committee, NBC, has called on owners and operators of Small and Mediums Scale Enterprises, SMEs to acquire the needed education and skills to sustain the growth of small businesses in the country.
NBC which made the declaration during its webinar conference with speakers drawn from different business organizations with the theme “Stimulating SMEs for growth” disclosed that there are ” over 1.4 million SMEs operating in the country according to survey conducted by Nigerian Bureau of Statistics, NBS.”
Responding to a question on the plan of his bank for SMEs, Chidi Eleka, Chief Transformation Officer and Head of SMEs, Union Bank Nigeria Plc, said: ” We have tried to simplify credit appraisal for SMEs. Traditionally, banks used to ask for audited financials, analysis of bank statements before loan amounts are approved for documentations.
”But today, because SMEs are small in scale and some of the records do not come at that level where efficiency is guaranteed, one of the things we do at that level is that we lend to SMEs based on their account statements.
“We consolidate their account activities and we use it to take a view of how much they can borrow and how much they are able to repay so that it won’t hurt their business. So, to put it simply, if an SME comes to the Union bank to borrow money today, what we do is to aggregate the footprint of the business and consolidation of all the account statements.
“When we have that in view, then we are able to make a determination of how much they can borrow. One of the most important things we look out for is whether SME has the records of what it has been able to achieve over the years because really, lending is as easy as the records you keep and the track record that can demonstrate the performance of the records you keep.
“So, you have to keep it simple. The track records and how well they are kept. Then on the basis of that, we can now support the business with working capital in terms of, does the business needs money to buy assets to grow?
In her own presentation, Deputy Director, Head of Customer Education, Central Bank of Nigeria, CBN, Chinyere Wobilorin, said education of the customer is key in view of the need for any SME to sustain itself.
According to her: ”For us to understand what the CBN is doing for the growth of SMEs, I will quote Steven Harvey’s book which said, ”it s better for us to seek to understand to be understood”. Since 1977, CBN has been conducting intervention funds but is it impacting the way we want it? Growth is an increase. If it is, there are issues that makes us not to increase. It is not just about money or the loan. For us to sustain growth, we have to engage in development activities which the CBN is doing.
”For the SMEs, we encourage them to continue in education perhaps on how to write bankable applications. How to do effective booking keeping, how to save to invest in businesses, separate their needs from their wants, separate personal money from their businesses, general financial management and how to participate in professional organizations in webinar such as this one.”
She continued: ”They should try to engage in skill-based training and to upscale themselves. It is for us to understand that lack of basic financial knowledge apart from money can impact growth. We need to change our mindset and learn how to apply and how to obtain it so that we can grow the economy.”
Similarly, representatives of Enterprise Promotion, Small and Medium Enterprises Development Agency, SMEDA, and Director in the organisation, Monday Ewan, said SMEs have a role to play in the growth of nations’ economies.
He said: “SMEs need to grow so that economies can grow. In order to stimulate their growth, you need to tackle those things that inhibit their growth. One of them is access to finance.
“Skill is very important for you to be able to manage and grow your finance. You need to have the skills. Even the off-take arrangement is very critical because after having the finance and skills and you cannot sell anything, you have achieved nothing.