There is no gainsaying that Micro, Small and Medium Enterprises (MSMEs) serve as the bloodline of most economies.
The strongest economies in the world like the United States of America, United Kingdom, Japan, and People’s Republic of China, Germany, and France, among others have strong and pragmatic policies that engender sustainable MSME growth and development.
A PricewaterhouseCoopers report, says MSMEs in Nigeria, totaling about 39 million, account for 48 per cent of the country’s GDP; 96 per cent of businesses and 84 per cent of employment.
While the Federal Government and the CBN have rolled out measures to sustain the growth and development of MSMEs, the latter still grapple with several challenges that stifle their advancement and competitiveness.
The challenges include rising production costs, reduced revenue, skills shortages, scarcity of foreign exchange, epileptic power supply, lack of financial support and challenges securing funds for production.
Granted that the Bank of Industry and other financial institutions provide loans and funding to drive Nigeria’s industrialization, micro businesses at the lowest rung of the ladder do not have the wherewithal to access the funds.
Given the strategic position of MSMEs to employment generation and sustainable economic growth, there’s the need to remove hurdles that they face in accessing funding.
The immediate step is to remove bottlenecks and stiff conditionality currently in place in accessing funding. A short-term loan could do wonders for most micro businesses.
Loan conditions for MSMEs must be made attractive for them to benefit and to impact on the economy.
A short term loan with little or no collateral to finance cash shortage is a credit facility given to individuals or businesses to drive urgent needs.
A Credit Analyst, Mr Korede Ojo, recalls that the Federal Government through the Federal Competition and Consumer Protection Commission (FCCPC) unveiled a list of approved digital lenders to operate in the country.
According to him, the regulation seeks to protect borrowers from illegal operations of unregistered and unlicensed digital loan companies and their loan Apps.
This is to help change the perception of the public on short-term loan providers in Nigeria.
Ojo stated that government’s regulation was designed to put greater pressure on digital lenders providing short-term loans to lend responsibly.
He argued that the level of intervention by government in the digital loan industry should help to increase consumer confidence, particularly that of MSMEs.
With government’s intervention, people now know that their voices would be heard and any problem they encountered would be dealt with by the FCCPC.
“This development will provide better access to loans and credit to enhance livelihoods and economic development.
“It is evident that applying for loans from licensed credit providers can be a great way to secure some extra cash in a financial emergency,’’ he said.
Buttressing Ojo’s submissions, a finance expert, Mr Gbemi Adelekan, charged MSME operators to embrace and harness the benefits of short term loans to enjoy quick credits.
Adelekan, Managing Director, Trafalgar Associates Ltd., (Kwikpay Credit), an approved digital lender, noted that wealthy individuals and businesses globally sourced credits to enhance their businesses.
He stated that in the past one decade, digital lenders had given quick loans to individuals to develop their side businesses and “hustle’’ while in employment.
He listed the benefits of short term loans to include faster delivery of funds as quick loans took lesser time to process, provided flexibility and often needed no collateral.
Other benefits, he said, were wide range of choices, early repayment benefits, reduced interests and enhanced credit score.
“The online application may take a few minutes to complete, with lending decisions received within an hour so if you need emergency access to funds for your personal or business needs, a short-term loan might be the answer.
“Another benefit is that cash is promptly available in emergencies like bereavement, payment of hospital bill, or sudden domestic expenses, subject to meeting the requirements to access the loan.
“While most short-term loans do not require any of your property or assets as collateral for short-term facilities with higher amounts, the lender might ask for some form of security for the loan.
“Improvement in borrowers’ creditworthiness opens up greater opportunities to secure larger loans in future applications,’’ he said.
He added that individuals in full-time employment were not left out of using short-term loans to sustain and develop their side businesses to the next level.
“Using a licensed lender to apply for quick loans means minimal documentation, a paperless process, and fast disbursement of funds if the requirements are met.
Dr Muda Yusuf, Founder, Centre for the Promotion of Private Enterprises, highlighting resilience strategies for MSMEs in 2023 said MSMEs success was pertinent to guard against the implications of political transition for the economy.
Yusuf noted that the macroeconomic terrain was currently beguiled by exchange rate risks, inflation risk, amidst on-going global headwinds, stressing that opportunities still abound for MSMEs to thrive.
According to him, Nigeria is blessed with opportunities with a market size of over 200 million people, the largest economy on the African continent, with a young enterprising population.
He said, however, that the monetary and credit outlook for 2023 showed monetary policy pointing in the direction of further tightening of financial conditions.
“Also, with the Cash Reserve Ratio and Monetary Policy Rate already at all-time high, further tightening is expected because inflationary pressure is yet to abate.
“This means, MSMEs would need to explore other credit options like cooperatives, and loans development finance,’’ he said.
Collaborative efforts must be adopted to provide credible financial solutions that will back up Federal Government’s efforts to drive sustainable growth and development of MSMEs, and by and large, the Nigerian economy.
