The country’s government is currently seeking ways to improve access to medium and long term funding for Nigerian entrepreneurs in 2014, though many believe that funding isn’t the only problem.
“We need to remember that we are 150 or 160 million people in the country so what that means is that there are a lot more SMEs that should be out there. We need a lot more entrepreneurs, we need a lot more people running businesses from the start up to the medium stage to the large stage” Ugbake Eguegu, managing partner at Accelsor Investment Partners told CNBC Africa.
The importance and significance of small and medium enterprises cannot be over emphasized as they remain the growth engines of any economy. However with the current high interest rates in the country, many argue a lot more could still be done.
“The problem is, with the banking industry, they are more comfortable with funding existing businesses so where you hear a lot of talk in the newspapers about zero COTs and a lot of efforts being put into funding SMEs, I still don’t feel it’s enough,” he explained.
Last year, the Nigeria Central Bank launched a N220 billion Micro, Small and Medium Enterprises fund to provide the much needed capital for that sub-sector of the economy. In addition, the Federal government slashed business registration fees in Nigeria by 50 per cent. Euguegu nevertheles believes SMEs need more support.
“We need people being funded from between three to five per cent long term with a lot of breaks and things like zero COT for us to actually impact the funding gap that is actually existing in the SMEs space,” he said.
Euguegu added that the SMEs in Nigeria are being helped the most by the informal funding structure, as the banks take a long time to understand the business plan and vision.
“We get a lot of people sending business plans to us, asking us to be part of their business and asking us for funding options, but the truth is that it’s still not enough. Many people come to us and businesses like ours to ask for funding but what needs to happen is not what is happening now,” said Eguegu.