The Nigerian Vice President, Prof Yemi Osinbajo, on Thursday said that the Development Bank of Nigeria (DBN) disbursed N250 billion grant containing a N50 billion MSME de-risking facility component to promote the growth of MSMEs in 2021.
He made the disclosure in Abuja at the third DBN Annual Lecture series themed: “MSMEs: Thriving in the face of domestic and global disruptions”, where he was represented by the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed.
According to him, 27 percent of MSMEs who benefited from the N482 billion are youth-owned enterprises, while 66 percent are owned by women.
He said: “The World Bank Group estimates the finance gap among formal MSMEs in developing economies to be 18 percent of GDP with potential demand for financing among informal MSMEs as high as 11 percent of GDP. This underscores the important role played by the DBN in facilitating access to finance.
“The relatively low contribution of MSMEs to exports is concerning given their significant contribution to nominal GDP and for this reason, urgent steps are being taken to alleviate the binding constraints limiting MSME participation in cross-border trade”, he said.
The Vice President revealed that in the development of the Economic Sustainability Plan (ESP), there were some provisions to support MSMEs. They include; N250 billion grant containing a N50 billion MSME de-risking facility component; a payroll support scheme providing up to N50,000 in monthly salaries for up to 10 staff of qualifying businesses for a duration of three months – 1.3 million jobs have been retained through the MSME and payroll support; a one-off grant of N30,000 for 333,000 self-employed persons working as transporters and artisans under the Artisan and Transport Scheme; a N50,000 grant for 100,000 MSMEs; provision of financial backing up to N191 billion in loans to 34,144 MSMEs; capacity building of 125 MSMEs and loan guarantees for 1,748 businesses to the tune of N6.2 billion etc.
The Managing Director of DBN, Mr Tony Okpanachi, reckoned that while global disruptions have believed that despite the reality of global disruptions in a world economy that is becoming more interconnected, there is still a compelling need for firms to innovate, particularly as the globe begins to slowly recover from the disruptions brought on by COVID-19.
He said that MSMEs made up 48% of Nigeria’s Gross Domestic Product (GDP) and promised to address their finance issues, especially given the harsh operating environment.
“In Nigeria, we’re currently plagued with rising inflation of 20.52% (as of September 2022). We are as well afflicted with rising food and commodity prices, coupled with the rising and unstable exchange rates among others. The effects of global disruption on international trade often come as a shock to businesses. These series of events have led to uncertainty and radical changes to companies’ well-established strategies across the globe and MSMEs are not exempted”, he said.
In his remarks, Dr Shehu Yahaya, Board Chairman, DBN, advocated for the continual support of MSMEs in light of the worldwide disruptions brought on by the Russian war in Ukraine, which have had a detrimental effect on the local economy.
“Supply chain bottlenecks as well as delays in the ports have led to higher costs passed onto businesses and households. Increases in energy cost without the needed power supply for businesses, have also led to comparative disadvantages that cut across various sectors of the economy.
“In addition, the challenges around insecurity as it relates to the agriculture sector have proven to be daunting. Farmers continue to feel unsafe on their farmland and lower yields during harvest is the unfortunate outcome. I strongly believe everyone gathered here today can appreciate the increase in food prices in the country.”
