…Scheme to serve as collateral for MSMEs
The Federal Government, on Tuesday, launched the first ever Nigerian Business Development Services Network for effective and productive performance of Micro, Small and Medium Enterprises in Nigeria.
The N39.6bn ($200m) project, called the Nigerian Business Development Services Network, is a network of private sector business development service providers that will work with MSMEs across the country to mentor them, provide support services and link them up with financial institutions.
Speaking during the launch of the NBDS and the unveiling of the National Business Development Services Market Place in Abuja, the Minister of Industry, Trade and Investment, Mr. Olusegun Aganga, said that the new initiative marked another milestone in the current administration’s determination to reposition the MSME sector as the major driver of inclusive and sustainable economic growth in Nigeria.
He said, “Today marks another milestone in the development of the MSME sector in the country. Over the course of this administration, we have championed the course of MSMEs and we have made them the centre of economic policy; we have treated them as a distinct sector and we have developed policies and programmes to enable them grow and contribute significantly to GDP growth.
“Today, we are launching the Nigerian Business Development Services Network, a network of private sector business development service providers that will work with MSMEs across the country to mentor them, provide support services and enable linkages with financial institutions.”
Aganga noted that in the latest survey on MSMEs, it emerged that access to funding was the biggest challenge for MSMEs in the country, pointing out that approximately 84.6 per cent of small businesses in Nigeria had to resort to personal savings and borrowing from friends and families.
He said, in addition to helping MSMEs to formalise their operations, the NBDS would also serve as indirect collateral for small business operators.
He said, “One of the reasons formal financial institutions have given for not lending to this critical sector is the informal nature of their operations, their poor record keeping and their lack of collateral in support of loans. These are the issues to be addressed by business development service providers.
“They will help the small businesses with their accounting records, and with formalisation of their operations. In addition, they will serve as some form of indirect collateral because financial institutions will be more comfortable lending to small businesses when they know that they are being guided by professional businesses development service providers.”
While commending the World Bank for their productive partnership with MITI, the minister expressed optimism that the NBDS initiative would go a long way in addressing sector specific challenges hampering the growth and development of major growth sectors of the nation’s economy.
He said, “The launch of this network and programme would not have been possible without the support of the World Bank Growth and Employment (GEM) project, which is managed under the Ministry of Industry, Trade and Investment. Again, another example of this administration’s effective ‘partnership for development’ drive.
“This is a $200 million programme, which is focused on stimulating industry wide activities in certain sectors in order to create jobs and improve the fortunes of participants in those industries.”
Aganga stated, “The sectors were carefully chosen for their job creation ability and the multiplier effect that the development of these sectors have on the overall growth of the economy. The sectors are: Information and Communications Technology, Hospitality, Building and Construction, Entertainment and light Manufacturing.
“The project involves engaging with stakeholders in these sectors and addressing sector specific issues hampering the growth of these industries. Deserving companies in these industries will also be given grants that will enable them develop their concept, hire additional staff and grow their business.”
World Bank Country Programme Director for Nigeria, Mrs. Indira Konjhodzic, added that the Business Development Market Place was specifically designed to help overcome the barriers to the use of business support services.
“It aims at rewarding the support service providers for meeting these needs, leading to the development of a track record for the service providers, enabling the support service market to gain momentum and become more self-sustaining,” she noted.
She commended the Federal Government for the support for the Market Place and for the launch of the “exciting initiative.”