Nigeria: BOI to boost loans to SMEs
The Bank of Industry (BoI) is ready to review its current credit portfolio to increase access to credit for micro, small and medium enterprises (MSMEs).The Bank of Industry (BoI) is ready to review its current credit portfolio to increase access to credit for
micro, small and medium enterprises (MSMEs).
The new chairman of the BoI, Alhaji Abdulsamad Rabiu, said that the current practice whereby 15 per cent of loanable funds are set aside to assist viable MSMEs in the country was no longer acceptable, Leadership newspaper reports.
He added that there is a need for it to carry out an upward review of the loanable funds in a manner that would enable the sector to create more jobs and generate wealth.
He also advised the bank's board to adopt the practice in China and Indonesia where a significant portion of loanable funds without collateral was extended to MSMEs, adding that about 97 per cent of such loans were repaid.
Compared to other emerging markets, Nigeria has historically shown
lack of commitment to building a strong SME sector, according to the central bank. In countries at
same levels of development, SMEs contribute a much higher proportion to GDP than currently observed in Nigeria.
Studies by the IFC show that approximately 96 per cent of Nigerian businesses are SMEs compared to 53 per cent in the US and 65 per cent in Europe. They contribute around one per cent of GDP compared to 40 per cent in Asian countries and 50 per cent in the US or Europe.