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Empowering The Nigerian SMEs

Small and medium enterprises represent an essential source of economic growth and sustainable development. Their significant contribution to employment and ability to create new lines of businesses are of great interest to banks. Chika Amanze Nwachuku reports

Ever since the financial crisis that hit the world economy in 2008, many of the world’s economies have continued to show slow or weak economic growth. Of great concern has been the increasing rate of unemployment in many nations and the growing disparity in income between the rich and poor.

A recent report by the Organisation for Economic Cooperation and Development (OECD), revealed that in its 34 member states, the richest 10per cent of the population earn 9.6 times the income of the poorest 10per cent and this is the largest income wealth gap for the past three decades.

The situation, according to OECD has been compounded by high levels of unemployment or underemployment as about 40per cent of the people in many countries cannot secure full-time work or stable employment, with the younger generations being the hardest hit.

Little wonder then that both developed and developing economies are now placing their highest priority on SMEs, having acknowledged the huge contributions, which these strata of business could make in any economy.
SMEs’ job and wealth creation capacity as well as their general socio-economic empowerment roles cannot be overemphasised.

In a paper titled the Dynamic and Importance of SMEs in Economy, Alexandru Ioan Cuza of University of Iasi, Romania noted that “SMEs represent an essential source of economic growth, dynamic and flexibility in advanced industrialised countries, just like they do in emergent economies and in development.”

SMEs, according to the OECD, represent more than 95 per cent of enterprises and ensure 60-70 per cent of the jobs. These small businesses, the OECD further stated, are very important in promoting competitiveness and to bring new products or technics to the market.

It is therefore fair to say that the performances and the development level of a national economy depends to a large extent on the capacity to create a good environment for SMEs, which can supply quality services and competitive products at a low cost and in quantities that are adjusted to the market.

The crucial role of SMEs as serving as a source of income and providing employment opportunities and contributing to economic growth, stakeholders say, underscores the need to provide adequate funding for their growth.

SMEs increase their productivity mostly through finance and in Nigeria, access to funds, has been the bane of development of this sub sector of the economy.

In fact, experts have posited that the single most daunting challenge confronting Micro, Small and Medium Scale Enterprises (MSMEs) in Nigeria  today, is the issue of funding. In other words, while a small business may have a very strong plan, products of impeccable quality or efficient service offering, suffer at the altar of lack of funding.

It is in appreciation of these facts that the federal government, through its agencies has intervened in the MSME sector in a number of ways. In addition to policy directives energising the sector, there have been fiscal incentives, grants, bilateral and multilateral agencies support aids as well as specialised provisions all geared towards empowering the MSME sub-sector.

The two agencies,  Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) and the Small and Medium Enterprises Equity Investment Scheme (SMEEIS) play very vital roles in funding arrangement and development of MSMEs.
Whereas SMEDAN is directly saddled with seeing to the resolution of all problems confronting (MSMEs), the latter is a financing window, which is supposed to attend to the funding challenges of small businesses in Nigeria. Although the SMEDAN has tried to adequately sensitise small business entrepreneurs, such sensitisations have yielded little or nothing without requisite funding.

FCMB’s Interventions
To bridge the financing gap in the operations of SMEs, the federal government, through the Central Bank of Nigeria (CBN) has provided additional financing windows to help the course of the MSMEs.  The First City Monument Bank (FCMB) happens to be one of the banks appointed by the CBN for the disbursement of the N220billion MSMEs fund provided by the federal government to support such businesses. The choice of the bank, without a doubt, followed its diligent commitment to efficient service delivery.  In line with its history of outstanding service delivery, FCMB has continued to provide support at various levels, including funding and advisory services, to customers operating in the SMEs segment to grow their businesses in a sustainable manner. This latest initiative was aimed at enhancing the financial, marketing and management skills of small and medium firms, and through it, the bank hopes to equip operators with the necessary skills they can readily deploy to effectively operate and grow their businesses and bottom-lines.

Through its recent partnerships with Shopp!ng Internet Services Limited, tagged: ‘’FCMB Capacity Building Initiative: Empowering the Nigerian SMEs’’, FCMB was recently  involved in series of free training and radio programmes cutting across various topical issues in the operation of SMEs. The pilot phase of the exercise, christened ‘cluster marketing’, kicked-off in Lagos and it has run for five months after which it would be extended to other parts of the country for another eighteen months.

The course content and the resource persons, who are highly experienced, were carefully chosen to ensure participants derived maximum benefits from the training.
Among the topics treated were, SME Challenges and Key Skills/Knowledge of a Successful Entrepreneur; Effective marketing of SME Products or Services; Managing Distributors, Resellers, and Agents for Success; Pricing Strategies to Increase Sales; How to Make the Best Use of Your Banking Relationship; Identifying  Biggest Business Opportunities, among others.

Providing a background on this intervention, FCMB’s Group Head, Business Banking, Mr. George Ogbonnaya, explained that the training was aimed at exposing participants to modern and innovative skills to help realise the individual’s objectives.
Ogbonnaya, who affirmed that the training was in line with one of FCMB Corporate Social Responsibility (CSR) focal areas and its value as a helpful financial institution, said: “FCMB realises that SMEs play pivotal roles in the growth of the nation’s economy. We also understand that a number of factors combine to determine the success or failure of an SME.”

He said the bank was committed to building a strong SME base in Nigeria and is focused on being a strategic partner to such businesses, considering the huge opportunities they offer in the areas of job creation, poverty eradication and economic development.

The FCMB’s Group Head, Business Banking disclosed that so far, the bank had disbursed about N1.3billion to 35 small business enterprises at all interest rate of 9per cent under the MSMEs scheme, with many other beneficiaries yet to access their processed funds.

He said that the bank had retooled its lending practice to SMEs with the introduction of a new and separate SME credit policy tailored to suit small and medium size businesses and also appointed dedicated lending officers in the branches with a view to bringing relevant skills and free consultant closer to SMEs, among others.

Ogbonnaya, who restated the Bank’s commitment to building a strong SME base in the country, said apart from funding SMEs, the bank developed a product, known as FCMB Business Account, which had been designed to meet the banking needs of customers in the SME space. These needs, according to him, vary from collection services, account management flexibility, alternate channels availability, accessibility to funds in account as and when needed, cost efficient pricing, access to loans, etc.
“It comes with a business debit card. This product comes with affordable account opening balance, with minimum opening balance of only N5,000, no limit to frequency of withdrawals as cheques are valid for clearing, apart from other very friendly features’’, he explained.

The initiative has continued to attract commendation from industry watchers. One analysts, who commented on this intervention by the bank, said “the amount represents the highest so far disbursed by any bank under the MSME funding scheme.”

Also, recently, FCMB introduced another package, which is currently trending in the nation’s SME space. It is called, FCMB e-invoicing. This is a unique electronic invoice payment service that has been targeted primarily at SMEs.

It is aimed at aiding SMEs to send out invoices and receives payments against invoices that tie to received payments for orders and on the whole, helps to manage SMEs’ operating payments and receivables.

The FCMB e-invoicing, it is understood, has been structured to increase productivity in the operation of SMEs. It is not only an electronic invoicing system, the e-formulae combines basic inventory management and accounting with electronic payment services. The system automatically stimulates the control of cash-flow and also puts SMEs’ customers at ease when making payments.

Another major advantage of this e-invoicing is that it reduces manual processing of invoices and makes an SME stay competitive in business.

According to a recent statistics provided by Ogbonnaya, over 17million SMEs are registered in Nigeria and they contribute significantly to the Gross Domestic Product (GDP).

He said: “FCMB realises the strategic importance of this and we are determined to be part of their success story.”
While reiterating the commitment of the bank to ensuring the successful disbursement and utilisation of the fund, Ogbonnaya urged operators in the SME business to avail themselves of the opportunities being provided by the bank’s free six months banking.

Asides these recent interventions, FCMB has indicated its readiness to aggressively support women managed-businesses in line with the MSME fund scheme. To achieve this, the bank is collaborating with women involved in SMEs for the provision of funding, sponsorship and advisory services.

Also recently, the bank launched a product christened Personal and Business Account, which guarantees traders, merchants, self-employed professionals and artisans, who operate businesses in their personal names, security in the conduct of such businesses in the event of unexpected disasters such as fire and flood incidents.

These mouth-watering incentives include zero Commission on Turnover (COT) charge, which is replaced by a small monthly service fee. Also, customers can carry out unlimited volume of debit transaction and withdrawals for a fee as low as N1,500.  It is programmed in such a way that it reduces the cost of banking for customers with heavy and daily transactions. Apart from reducing banking charges, the bank will support the customer with a free insurance cover of up to N1million in case of loss of goods/stock due to fire or flood disaster.

 

 

Source: Thisday Nigeria

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