The end of 2014 has been a worrying one for Nigeria, falling crude oil prices is threatening the economy in turmoil. Fortunately the Nigerian government is being very forward thinking and has put through new ideas to help the economy sustain and even continue to grow. The Nigerian government has taken the initiative to look at other contributors away from the crude oil industry – this will help safe guard it in the future from further risks.
To bring further hope to 2015 the Bank of Industry, which is Nigeria’s oldest and largest development financing institution charged with providing financial assistance for the establishment of SMEs, has teamed up with 10 SME-friendly commercial banks to alleviate their funding issues.
All around the world SMEs play a vital role in contributing to a country’s GDPs, this helps reduce unemployment which in turn helps build sustainability in the economy. This theory is evident in developed countries; in the EU SMEs account for more than 90% of existing enterprises and constitute the backbone of every market economy.
10 banks have partnered with the BOI, areas of collaboration will include provision of the long-term loans to qualified SMEs by BOI based on its Risk Acceptance Criteria (RAC), provision of working capital to the SMEs by the SME-friendly banks also based on their individual RAC and financing sectors such as agro-processing, solid minerals and metals, light manufacturing, logistics and the like.
The loans are expected to be in accordance with BOI terms, with loans with a 3 – 5 year tenor for 6 – 12 months at 9 – 10 percent interest rate.
The Managing Director of the BOI, Mr Rasheed Olaoluwa states that this collaboration is needed to ensure the removal of a significant hindrance to SME growth and development in Nigeria is the lack of access to affordable finance.