SMEDAN, ADB explore partnership on SME funding

The Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) and the African Development Bank (ADB) have begun fresh talks on provision of access to working capital for micro, small and medium enterprises[MSME] in Nigeria.

The discussion which took place recently in Abuja between the Agency and a delegation from the continental development finance institution who were on a country visit to Nigeria, centered on the creation of a special pool of fund in the African Development Bank specifically for MSME funding and promotion.

Speaking while introducing his team from the ADB, the Credit Bureau Manager for Africa, Dr. Muhammad Damak, disclosed that they were visiting selected Ministries, Department and Agencies (MDAs) of the Federal Government of Nigeria, adding that their purpose of coming to SMEDAN was to be abreast of and evaluate the activities of SMEDAN towards the promotion of MSME development and also to ascertain the needs and challenges facing the MSMEs sector in general and SMEDAN in particular. Dr. Damak said that they had met with the Central bank of Nigeria and some commercial banks in the country on the prospects of giving loans to small scale business operators.

Welcoming the delegation to his office, the Director-General of SMEDAN, Muhammad Nadada Umar, commended them for the visit and listed among others, the challenges the Agency was facing in the discharge of its mandate, especially in the area of facilitation of access to business finance for MSMEs. Some of these challenges include high interest rates and hidden charges as well as demand for collateral securities by commercial banks.

The Director-General informed the ADB team that the Agency, however, had recorded success some level of success with its collaboration with the national Economic Reconstruction Fund [NERFUND] and the Bank of Industry [BOI]. He also noted that the Agency was working in liaison with NASENI to link entrepreneurs with the research and development [R&D] results to harness them for productive uses. He also revealed other efforts of the Agency which include the collaboration with National Bureau of Statistics to collect data base for the country and the rating of MSMEs to make them marketable to national and international investors.

Also in his remark, the Director of Strategic Planning, Policy & Coordination [SMEDAN], Mr. Olawale Fasanya, said the Agency’s collaboration with NBS to collect MSME database had commenced with a pilot scheme already in Kano and Lagos. He then called on ADB to support the Agency in building and financing cluster in some areas and making sure that monies meant for MSME development given to banks actually got to the operators.

Fasanya also recalled that SMEDAN initiated a collaboration with the African Development Bank [ADB] in 2007 through the then Country Representative in Nigeria, Dr. Sipho S. Moyo but regretted that the relationship did not last due to the transfer of the Resident Representative from Nigeria. He expressed hope that the renewed interest of ADB in SMEDAN would yield fruitful result.

Meanwhile in another development, SMEDAN and a non-governmental organization – Alliance for Green Revolution in Africa (AGRA) has begun partnership talks to fashion ways of unlocking the various potentials derivable from financing the agro-based enterprises. This partnership talks began during a courtesy call by the Alliance for Green Revolution in Nigeria to the office of the Director-General of SMEDAN.

Introducing his organization to the Director-General of SMEDAN, the leader of the team and a Senior Consultant with Phillips Consulting Nigeria, Mr. Tayo Badru, who was accompanied by Mr. Nathan Gonzalez of McKinsey & Company stated that their purpose of coming to SMEDAN was to share key aspects of the solution design and get their perspective on the Agency right and to better understand SMEDAN’s mandate and explore possible areas of partnership/collaboration with the proposed incentive –based Risk Sharing Framework for Motivating Agricultural Lending in Nigeria (NIRSAL).

Alliance for Green Revolution in Africa (AGRA) together with McKinsey & company/Philips Consulting Nigeria are working with the Central bank of Nigeria (CBN) to support the design of the proposed incentive-based Risk Sharing Framework for Motivating Agricultural Lending in Nigeria (NIRSAL). The overall goal of NIRSAL is to develop a new innovative mechanism for helping to unlock commercial bank financing to serve the needs of different categories of farmers, especially small-holder farmers, agro-processors, agri-businesses and input suppliers in the agricultural value chain.

Badru equally said that NIRSAL is clustered into five core components, namely: risk sharing facility; insurance components, technical assistance facility, bank incentive mechanism, holistic bank rating system. In the course of the project, the team has been involved in engaging with various NIRSAL stakeholders and potential partners in both the public and private sectors- including CEOs of banks and insurance outfits, large scale farmers and a host of others.

In his response, the Director-General of SMEDAN, Muhammad Nadada Umar represented by the Director, Inspectorate and Extension Services Department Mr. Pope Jethro Atukpa re-affirmed that SMEDAN was created and mandated to promote and build capacity for MSMEs. “If MSMEs develop, there would be jobs and wealth creation. But we have challenges concerning funding and we are glad that your organization is coming out with funding plan. It is a welcome development and we are ready to partner with you, provided you give us the full details of the proposal”, he added.

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