CBN allocates 6.63% of N10.39trn loans to MSMEs in 10 years

By Sodiq Adelakun

A report from the Central Bank of Nigeria (CBN) has revealed that over the course of ten years, only 6.63 percent of the total N10.39 trillion loans disbursed to various sectors were allocated to intervention programs supporting Micro, Small, and Medium Enterprises (MSMEs).

According to the detailed report, a total of N689 billion was earmarked for the MSME sector between August 2013 and September 2023. However, this allocation places the MSME sector third in terms of the least funding within the intervention programs, trailing behind the export sector with a mere 2 percent allocation and the health sector, which received only 1 percent of the total intervention funds.

The intervention programs encompass initiatives such as the Micro, Small, and Medium Enterprises Development Fund (MSMEDF), Agri-business/SME Investment Scheme (AgSMEIS), Nigeria Youth Investment Fund (NYIF), and Tertiary Institutions Entrepreneurship Scheme (TIES), among others.

Despite the relatively low allocation, the report indicates positive performance indicators within the MSME sector. The majority of credit facilities allocated to MSMEs have either been fully repaid or are currently in ongoing payment status for the projects, suggesting a commendable level of financial discipline and project viability within the sector.

Top Five Beneficiaries of the loan programmes for MSME sector

Data from the Central Bank of Nigeria (CBN) indicates that a minimum of eight loan programs were specifically aimed at key players in the MSME sector. Below are the programmes:

Micro, Small and Medium Enterprises Development Fund (MSMEDF): According to data provided by the Central Bank of Nigeria (CBN), these loans were financed by the CBN in conjunction with Private Finance Initiatives (PFI) to bolster MSMEs in sectors like manufacturing, pharmaceuticals, and cement companies.

Agri-business/SME Investment Scheme (AgSMEIS): The AgSMEIS loan was funded by the CBN and annual 5 percent PAT contribution of DMBs. The top beneficiaries include the manufacturing sector, fashion, agriculture and hospitality.

Targeted Credit Facility (TCF): The Targeted Credit Facility (TCF) was an initiative financed by the CBN as a stimulus package to cushion the effects of the COVID-19 pandemic on households and SMEs.

Creative Industry Financing Initiative (CIFI): The Creative Industry Financing Initiative (CIFI) is a loan facility targeted at the creative industry of the country. The loans, disbursed by the CBN, were allocated through private finance initiatives (PFI) to improve access to low-cost financing to entrepreneurs and investors in the Nigerian creative and information technology (IT) sub-sectors.

Nigeria Youth Investment Fund (NYIF): The Nigeria Youth Investment Fund (NYIF) was one of the top beneficiaries of the intervention programmes by the CBN.

According to the report, the credit facility was given to ameliorate youth unemployment challenge in Nigeria by channeling finance to youth and youth-owned enterprises. The report also noted that the initiative helped create 11,106 direct and indirect jobs across the six geopolitical zones.

Micro, Small, and Medium Enterprises (MSMEs) in Nigeria continue to face significant hurdles in accessing funding, despite the fact that 88 percent of the country’s employment rate comprises self-employed individuals, primarily working in the informal sector, according to the National Bureau of Statistics (NBS).

This trend not only underscores the pervasive entrepreneurial culture among Nigerians but also underscores the urgent need for targeted support and policies to nurture and sustain the self-employed sector, which holds considerable influence over the nation’s economy.