The Chief Executive Officer, Stanbic IBTC Holdings Plc, Dr. Demola Sogunle, has said only 4 percent of the 40 million Micro Small and Medium Enterprises have access to credit facilities in Nigeria.
He spoke at an event organised by the Nigerian Economic Summit Group (NESG), in collaboration with Zedcrest Group, with the theme “Securing and Enriching Nigerians at Scale: Prosperity Inclusion through Financial Sector Innovation.”
He said the financial sector is essential to drive financial inclusion and economic growth.
He noted that Nigeria ranks low regarding financial penetration, with 40 percent living below the poverty line, with only 4 percent of the 40 million MSMEs having access to credit.
According to him,it was crucial for the financial sector, through commercial banks, capital markets, and the insurance sector, to play a vital role in funding capital investments and not just providing industry loans or concentrated in the oil and gas sector.
He said: “The factors affecting the financial sector include lack of credit history, inability to keep proper financial records, non-realisation of collateral, lack of management strategies, stiff competition from larger corporates and limited business presence of micro-SMEs.
He emphasized the need to adopt partnerships that will drive mobile adoption and inclusive development.
He called for the development of credit infrastructure, creation of financial literacy programmes, facilitate open banking initiatives for information sharing and collaboration to develop innovative financial products amongst stakeholders.
He noted that homegrown solutions to some of these problems include online payment provisions, payment data to determine lending risks which can be obtained from smartphones, SME hubs to generate records on transactional activities and improved credit scoring in the rural areas, mainly where banking activities are limited, reiterating that businesses must strengthen their capital base to survive as Small and Medium Enterprises.