Studies have indicated that more than 70% of the Small and Medium Scale Enterprises (SMEs) in Africa, including Nigeria, lack access to medium-longer-term finance, creating an SME funding gap of more than $140 billion in the continent.
Consequently, protection of SMEs through the establishment of a solid framework supported by government policy is the first step in creating an active Small and Medium Enterprises sector.
The development could spearhead the much needed revolution the country requires in the area of building the next generation of African corporate bodies.
A statement on Sunday quoted the Managing Director/Chief Executive Officer of Heritage Bank, Ifie Sekibo, as saying this at the 2nd United States-Africa Trade & Investment Forum in New York recently.
He spoke on the topic, “Small & Medium Enterprise Funding in Africa —A Banker’s Experience,” focusing on how the bank had performed in the area of SME banking in Nigeria. He said, “Using Nigeria as a case study, between 2003 and 2009, SME loans as a percentage of total credit, decreased from 7.45% to 0.18%. Yet, by 2012, Nigeria had about 17.6 million SMEs employing about 32.4 million people.
“Although, it is generally accepted that SMEs enhance competition and entrepreneurship, and their development has a positive impact on innovation and productivity growth, policy and infrastructure factors to mitigate risk and costs that SME sector cannot internalise need to be seriously worked upon by all relevant stakeholders.”
He further stated that in Nigeria, most SMEs die within the first five years of existence while another smaller percentage goes into extinction between the sixth and tenth year, with only five to 10% surviving, thriving and growing into established corporate status.