Favour Okoro runs a small tailoring and fashion designing shop along Okumagba Avenue, a busy neighbourhood in Warri. She has five sewing machines. It is a small business that employs six tailors and two designers. Her clientele includes the affluent, the average and low-income earners.
Two years ago, when her business came into a boom and there was a rush of clients, she started thinking of expanding by buying more machines, employing more hands and moving into a bigger shop.
Then, she heard of the Central Bank of Nigeria’s N220 billion intervention fund for Micro, Small and Medium Scale Enterprises (MSMSEF).
Ms. Okoro was hopeful when she heard about the Fund, but not too long, her hopes faded after she tried several times, without success, to access it.
She had planned to use the fund to buy modern sewing machines, sewing materials and large quantities of fabric, to drive her plans to venture into clothes export.
When she was interviewed, she complained that her business was struggling because of difficulties in accessing funds for the much-needed expansion.
In Aba, the South-east’s entrepreneurial capital, many businesses had gone through similar challenges and eventually gave up on the CBN funds.
The chairman, East-End Branch, Association of Tailors and Fashion Designers (ATFAD), Aba Chapter, Innocent Onwukwe, said that thousands of his members had also tried in vain to access the CBN intervention fund in the last three years. He said it was a demoralising experience, frustrating the growth of their businesses and threatening their survival.
The importance of MSMEs in an economy remains very pivotal, especially as evidence abounds that economic growth and development of prosperous and progressing countries all over the world have been driven by MSMES.
According to the National Bureau of Statistics (NBS), Nigeria has about 37 million MSMEs, and if properly financed, it is expected that they would make far-reaching contributions to the country’s quest to rank among the top 20 economies of the world by 2020.
Although the CBN claimed it established the N220 billion MSMEDF in recognition of the significant contributions of the MSME sub-sector to the economy and the existing huge financing gap, investigations have revealed that the fund has remained largely inaccessible, and a majority of the MSMEs seem unaware of its existence.
To access the Fund, the CBN asked MSMEs to apply through Participating Financial Institutions (PFIs), as its statutes do not allow it to deal directly with businesses on such issues.
The criteria, according to the CBN, are that PFIs submit requests from MSMES to the Fund in a format that shall be prescribed by the CBN from time to time.
It also said that applications would be processed on receipt of complete documentation, while it would communicate the terms and conditions for the approved grant within one month of submission.
While the CBN claimed that about N76 billion has been disbursed to MSMEs, investigations reveal the opposite.
Engagement with major MSME associations faulted this claim and revealed that most MSMEs have been unable to access any cash from the Fund.
The complaint of inaccessibility was corroborated by the Bank of Industry (BoI), a major party in the disbursement of the MSMEDF, which disclosed that it was yet to access the Fund for onward disbursement to MSMEs.
To buttress the country’s losses due to the poor administration of the Fund, the National Bureau of Statistics (NBS) revealed that Nigeria spent N2.29 trillion on importation in the first quarter of 2017 alone.
Today, 80 per cent of Nigeria’s consumption comprises foreign products; and if this money had been properly disbursed to local entrepreneurs, the country’s import rate would have dropped by now — because the local manufacturers would be encouraged to produce.