The recent analysis released by the African Development Bank (AfDB), indicating that Nigeria needs a whooping $160 billion to meet the funding demands of its micro, small, and medium-sized enterprises (MSMEs), calls for urgent remedial intervention in the sector. This colossal amount highlights the challenges in financing these businesses, which are crucial to the nation?s economy.

Nigeria, the most populous country in Africa with 229 million people as of 2023, faces a significant gap between available financial resources and what is needed. As of September 2024, the Central Bank of Nigeria (CBN) reported that the total money supply was N108.954 trillion, roughly $65.5 billion at the current exchange rate?far short of what MSMEs require.

MSMEs are critical to Nigeria?s economy. They contribute 40 per cent of the country?s Gross Domestic Product (GDP) and provide 90 per cent of jobs. This is particularly important in a country where half the population is under 17 years old. Over the next five years, Nigeria will need to create opportunities for its young population, whether through employment or entrepreneurship. Over the next 20 years, the AfDB estimates that the country must generate up to 130 million jobs for its youth.

However, access to investment capital remains a major challenge. Many young entrepreneurs, especially women, lack the education, resources, or collateral to secure loans from commercial banks. Studies show that less than one per cent of banking loans?approximately $340 million?go to MSMEs. In addition, private equity and venture capital funding totaled just $640 million in 2023.

Due to these financial hurdles, many small businesses in Nigeria struggle to survive beyond five years, according to data by the National Bureau of Statistics (NBS). To address this, local authorities have taken steps, including urging commercial banks to allocate 10 per cent of their loan portfolios to MSMEs and creating entrepreneurship support funds. However, these measures have fallen short of meeting the demand.

In an apparent response to this dire economic situation, the AfDB is leading a $300 million initiative to establish a financing mechanism for MSMEs just as the federal government has raised the amount of funds small businesses could access under single interest rate to a maximum of N5 million in its effort to foster inclusive economic growth.

The Managing Director and Chief Executive Officer, Bank of Industry (BoI), Dr Olasupo Olusi, who disclosed this in Lagos during a town hall sensitisation on the federal government Grant and Loan Scheme, said that the government is committed to supporting the growth of MSMEs.

Olusi, who was represented by Executive Director, MSMEs, BoI, Umar Shekarau, commended President Bola Tinubu for the N200 billion Presidential Intervention Fund for Micro, Small, and Medium Enterprises (MSMEs), with N75 billion set aside, specifically, for MSMEs.

He said N75 billion out of the presidential conditional grant and loan scheme was earmarked for MSMEs, adding that the initiative was expected to create thousands of direct and indirect jobs nationwide. He stated that the fund, facilitated through the BoI nationwide, is ready for disbursement to beneficiaries at an annual interest rate of nine per cent.

Urging business owners to approach the BoI directly for loan or register online, without going through intermediaries, he said over 800,000 Nigerians have benefited from the loan and there is room for including youths, women, physically challenged and all Nigerians.

Senior Special Assistant to the President on Job Creation and MSMEs, Temitola Adekunle-Johnson, said that the increase in loan size?from the previous N1 million to N5 million?aimed to address the financial and infrastructural challenges confronting small and medium scale businesses across the country

He said, ?The loan is nine per cent three years tenure. A single MSME can collect up to N5 million single digits. This scheme is expected to create thousands of direct and indirect jobs nationwide.?

The Initiative was part of a broader federal strategy, developed in collaboration with the Ministry of Finance, the Ministry of Industry, Trade and Investment, the Presidency, and other stakeholders.

Also speaking, the Minister of Finance, Mr Wale Edun, who was represented by Ahmed Gazalli, highlighted the importance of MSMEs to the national economy. He described the programme as a step in Nigeria?s drive towards achieving economic empowerment and sustainable growth.

According to him, ?MSMEs form the backbone of our economy. Supporting their growth is essential for achieving our vision of an inclusive, thriving economy.?

He reiterated the government?s resolve to remove barriers hindering MSMEs expansion while strengthening the manufacturing sector to reposition Nigeria?s economic landscape. (Blueprint Editorial)

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