The Central Bank of Nigeria has been contributing to the development of enterprises in the small and medium scale sub-sector since 1970. The CBN credit guidelines required that the commercial and merchant banks allocate a minimum stipulated credit to sectors classified as preferred, including the SMEs. The CBN also stipulated differential interest rates for sectoral credit allocations with varying moratorium on the repayment of loans and advances. For example, the CBN in 1979/1980 stated that at least 10 per cent of the loans advanced to indigenous borrowers should be allocated to SMEs. This was later raised to 16 and minimum of 20 per cent of total loans and advances from April 1980 and 1990, respectively (Salami, 2003).
The CBN also contributed to the establishment of development finance institutions (DFIs) in which the CBN holds substantial equities shares. This was done in order to ensure steady availability of long-term finance to enterprises. The CBN also facilitated the establishment of the N100 million Agricultural Credit Guarantee Scheme Fund (ACGSF) in 1977 to guarantee up to a maximum of 75 percent of commercial and merchant banks’ agricultural credit. Other institutions, which the CBN facilitated their establishment, include the Nigeria Export-Import Bank (NEXIM), established in 1991. (Anyawu, 2003).
The Central Bank of Nigeria has evolved new initiatives which are aimed at improving availability and accessibility of credit to the SME through the following:
1. The Small and Medium Industries Equity Investment Scheme (SMIEIS)
2. Nigerian Agricultural, Cooperative and Rural Development Bank (NACRDB)
3. The Bank of Industry (BOI)
4. Bank of Agriculture (BOA)
5. Refinancing and Rediscounting Facility
6. The Microfinance Policy, Regulatory and Supervisory Framework for Nigeria
7. The N100 billion Cotton, Textile and Garment (CTG) Fund
8. Micro, Small and Medium Enterprises Development Fund (MSMEDF)
9. Agri-Business/Small and Medium Enterprises Investment Scheme (AGSMEIS) (Central Bank of Nigeria, 2017, Anyawu, 2003, Development Finance Department Central Bank of Nigeria, 2014, Survey report of MSMES in Nigeria, 2010, Survey report of MSMES in Nigeria, 2010,Salami, 2003 and Essien, 2001).
THE SMALL AND MEDIUM ENTERPRISES DEVELOPMENT AGENCY OF NIGERIA (SMEDAN)
The Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) is the apex and coordinating institution for all matters relating to stimulating, resuscitating and developing MSMEs in Nigeria (Egbon, 2004). It was established in 2003, to facilitate the promotion and development of a structured and efficient Micro, Small, and Medium Enterprises (MSMEs) sector so as to enhance sustainable economic development in Nigeria (Survey report of MSMES in Nigeria, 2010).
The mission of SMEDAN is to facilitate the access of micro, small, and medium entrepreneurs/investors to all resources required for their development and with the overall objective of alleviating poverty, expanding gainful employment opportunities, wealth creation and sustainable economic growth and development (Egbon, 2004).
The Agency is also responsible for making contribution towards the attainment of Vision 20-2020.
SMEDAN provides the following services:
1. Generation and dissemination of Business information
2. Business Awareness creation
3. Business Development Services
4. Access to Market and Finance
5. Advancing Entrepreneurship Education
6. Stimulating Entrepreneurship/Enterprise Development
7. Enterprise cooperation and clustering
8. Policy Advocacy for improved Business Operating Environment (Survey report of MSMES in Nigeria, 2010).
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The Youth Enterprise with Innovation in Nigeria (You Win) Programme
SMEDAN is the monitoring Agency of The Youth Enterprise with Innovation in Nigeria (You WiN!) programme is a collaboration of the Ministry of Finance, the Ministry of Communication Technology (CT), and the Ministry of Youth Development that launched an annual Business Plan Competition (BPC) for aspiring entrepreneurial youth in Nigeria to develop and execute business ideas for employment generation. The programme was implemented in partnership with Nigeria’s private sector to provide the funding support (Survey report of MSMES in Nigeria, 2010).
THE ROLE OF BANKING SECTOR IN FINANCING MSMES:
Commercial banks and specialized banks have many ways to get involved in SMEs finance, ranging from the creation or participation in SMEs finance investment funds, to the creation of a special unit for financing SMEs within the bank. According to Ayeni and Abiodun, 2015, Banking Sector services provided to SMEs include:
1. Short term loans compatible with SMEs business and income patterns.
2. Medium and long term loans.
3. Bank overdraft facility.
4. Factoring and invoice discounting, asset finance (including commercial mortgages), and equity finance.
5. Marketing and promotion of CBN’s schemes, registration of participants, processing of application for loan and loan disbursements (Oshiobugie and Okoh 2015).