Strengthening Micro, Small, And Medium Enterprises Through Credit Facilities

Strengthening Micro, Small, And Medium Enterprises Through Credit Facilities

The definition of Micro-business, Small business and Medium scale business, depends on the country and who is defining the terms.

In Nigeria, for instance, Micro, Small and Medium Enterprises MSMEs are generally referred to as enterprises with up to 250 employees.

The breakdown shows that micro enterprises comprises employees between 1 and 9, small businesses between 10 and 49, while the medium enterprises has the capacity to employ between 50 and 249 employees.

It is to be noted that Micro, Small, Medium enterprises represent the most important sector of the nation’s economy, especially for their role in wealth creation, employment generation, skills acquisition and poverty reduction.

They also engage in manufacturing, processing, production, and preservation of goods and commodities, hence a key ingredient for a healthy market economy.

In spite of their importance, their growth and profitability are often hindered by series of constraints, including stiff competition from larger companies, difficulties in sourcing raw materials, poor educational background of operators, multiple taxation and inadequate social infrastructure.

Also, observations over time show that MSMEs in Nigeria are financially handicapped arising from their inability to raise enough funds, particularly from institutional sources due largely to high interest rates.

Good enough, President Bola Ahmed Tinubu’s administration has particular interest in the growth of MSMEs in the country through several initiatives put in place to assist both small and large businesses with funds provided by a variety of Government — backed organizations or agencies including Bank of Agriculture, Bank of Industries, Central Bank of Nigeria, Development Bank of Nigeria, Nigerian Export-Import Bank-NEXIM, and Small and Medium Enterprises Development Agency of Nigeria – SMEDAN.

Unfortunately, the aim of the good gesture which ought to be a direct contribution to food security, and a direct strategy for poverty alleviation and social integration among disadvantaged groups, might not fully be realized when it is not well monitored and implemented.

In the light of this, the approved fund should go direct to the real beneficiary, a greater percentage of the funds should go to female entrepreneurs following difficulties women face in raising finance for their businesses compared to their male counterparts.

Also, considering the fact that majority of MSMEs are informal enterprises with inadequate business structure, there is a compelling need to build their capacities through workshops to properly arm them with entrepreneurial skills needed to facilitate their business undertakings and sharpen their knowledge of financial management.

It is however on record that, the most effective way to end hunger and poverty is by increasing investments in the agricultural and business sectors.

Therefore, provision of credit facilities to MSMEs by different levels of government in the country, should be a matter of urgent attention, at least to salvage the lives of this small and medium scale holders who cannot save enough money from their meagre earnings.

By Maurice Asuquo, Edited By Grace Namiji