Bullion
Keywords
Micro Small and Medium Enterprises (MSMEs), Industrial development, Economy, Employment generation, Nigeria.
Abstract
MSMEs play a major role in most economies, especially in developing countries. This paper examines the opportunity provided by FSS2020 to enhance development of the MSME sector in Nigeria. The paper begins by examining the concept of FSS2O2O strategy for the MSME sector with specific focus on the six (6) Strategic Objectives and three (3) Transformational Programs to drive the development of the sector. These strategic objectives and the respective initiatives have a high multiplier effect on the entire Nigeria financial system. The six objectives ore: Advocate and Work with the government to Drive SME development, 2. Promote Financial Reporting and Governance, 3 Collaborate with Quality Control Organizations to ensure Micro and SMEs output meet National & international Standards, 4. Collaborate on the Development of Financial Services, Products and Channels, 5. increase the Provision of Long Term low interest Financing and 6. Couple the enhancement of Access to finance with Business Development Support. FSS2O2O MSME sector achievements includes: passage of the Secured Transaction in Moveable Asset Bill into Law and assent by the President of the Federal Republic of Nigeria; Sponsoring of the SMEDAN Amendment Bill, initiation of Business Community Based Credit Model (B2CM); Enhanced collaboration with SMEDAN and other implementing institutions; advocacy for government support through MSME intervention Fund. The major setbacks of FSS2020 strategy include: perceived dominance of the program by CBN; poor funding of initiatives; lock of business management skills/capacity of stakeholders on NCR Software; lack of on integrated and inter-operable credit management software amongst financial institutions (finance providers); absence of corporate governance & business standards for MSME projects; Lock of Central identity database for MSMEs; low collaboration with the Financial Reporting Council (FRC) for the implementation of tailored IFRS for MSME and struggling engagement with NAFDAC, SON and others; security challenges which may hamper the development of clusters; stringent collateral asset quality requirements for SMEs ;Stringent registration requirements for new entrants to the Alternative Securities Market (ASeM); non-cooperation of the State and Local Governments (low interest, low funding); inadequate alignment of State Councils on MSMEs with National Council on MSMEs (only 14 of the 36 States have keyed in into this initiative); lack of access to funds by MSMEs; lock of o regulatory framework for accreditation of business development services providers; low level of financial literacy and awareness among others. Some measure recommended to mitigate these challenges include: intervention meetings amongst key stakeholders; enhance collaboration between CBN and other stakeholders in the area of funding projects, engagement of State Governor f or the implementation of SPV for SME production and development; increase advocacy; provision of integrated and interoperable credit management software amongst financial institutions; collaboration of SMEDAN; enhancing financial innovation & Access (EFlnA) on Access to finance and enhanced financial literacy advocacy. The paper concludes by highlighting the FSS2O2O designs a new credit model for MSMEs in Nigeria and FSS202O supports SMEDAN Amendment Bill to strengthen MSMES operations in Nigeria.
Publication Title
CBN Bullion
Issue
3
Volume
41
Recommended Citation
Mustapha, Adewale M.
(2017)
"MSME sector: the new paradigm for Nigeria's economic development,"
Bullion: Vol. 41:
No.
3, Article 7.
Available at:
https://dc.cbn.gov.ng/bullion/vol41/iss3/7
Included in
Business Administration, Management, and Operations Commons, Economics Commons, Entrepreneurial and Small Business Operations Commons, Finance and Financial Management Commons