‘Government Needs To Localise MSMEs Clinic To Widen Reach’
Funke Susan Medun is a director at Leapworld Limited. Leapworld Limited is a firm helping micro, small and medium enterprises (MSMEs) access funding and write good bankable business plans.
Funke has over seventeen years’ experience in entrepreneurship. In this interview with JOSEPHINE OKOJIE, she looks at the Nigerian entrepreneurship system. Also, they look at what the government can do to address some of the key issues.
Despite a lot of funding available for entrepreneurship development in the country, why are businesses still not able to access most of these funds?
I will start by aligning with a statement credited to the vice president during the MSME clinic launch in Onitsha. The vice president said MSMEs might be small. But together, they account for up to 50% of Gross Domestic Product (GDP) and over 80% of the labour force. I am always delighted to have a discourse on MSMEs.
From my experience, there are a couple of barriers to MSMEs having access to funding available for them. From the internal processes, a lot of small businesses do not have the system and structure in place to access needed finance to grow their businesses. And this is a huge barrier. The financial institutions want a guarantee that small businesses have the capacity to repay back loans. And this can be assessed using the systems and structures provided by the MSMEs themselves. You can provide what you don’t have. MSMEs need to start keeping proper records. Also, there is a need to also separate the expenses of the owners from the business. This will help the business to have a life of its own. These are things start-ups and MSMEs can do for themselves.
Apart from development banks like the Bank of Industry (BOI), Bank of Agriculture, Lagos State Employment Trust Fund (LSETF), some CBN initiatives and others intervention funds with friendly SMEs conditions such as lower interest rates and less stringent conditions, most of the conditions of money deposit banks are too stringent and with double-digit interest rate for MSMEs to access. Most of the conditions are beyond small enterprises that are struggling to survive and often cannot provide the needed collateral/ lending conditions to access the loans.
Also, information is not available to a lot of MSMEs. Lagos state is doing great with the Lagos State Employment Trust Fund (LSETF), and I think other states should emulate them. You would be shocked to know that a lot of businesses that operate in Lagos do not know about LSETF. Some are aware but do not know the criteria needed to access it. However, some believe the fund is only meant for businesses whose operators are indigenes of Lagos State. Also, some believe that it is a national cake so they do not have to meet the criteria to access the fund. There are lots of low-interest funds for MSMEs, even grants, but all these barriers have prevented small and medium enterprises from accessing available funds. MSMEs should constantly seek strategic information to leverage for growth.
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