One of the main purposes of government assistance programs is to encourage SMEs to develop and improve their performance. Though outside and within the Nigerian context, research on government support indicates a positive outcome. The increased failure rate of SMEs, on the other hand, suggests the opposite consequence.
To address these issues, the Nigerian government has established several agencies to assist SMEs. Furthermore, at least 26 of Nigeria’s 36 state governments have set up an SME development agency or office.
Keep in mind that not all aid from the Federal Government reaches small businesses directly. Some of them go to the States and Local Governments, charitable groups, and higher education institutions. These organizations then distribute the monies or use them to give local technical or educational help. The FGN helps fund businesses through a variety of government-backed organizations or agencies.
5 Government Assistance Programs For SMEs in Nigeria:
Small & Medium Enterprises Development Agency of Nigeria (SMEDAN)
SMEDAN came into existence in 2003. The mission was to stimulate, monitor, and coordinate the creation of initiatives and policies to help small businesses expand. SMEDAN, on the other hand, has been largely ineffectual. Despite repeated demands from civil society groups under the Freedom of Information Act, SMEDAN has refused to give detailed information about the training program’s implementation and recipients.
SMEDAN is in charge of incentivizing, monitoring, and coordinating the growth of MSMEs in Nigeria. SMEDAN also assists MSMEs in obtaining credit and other sources of capital as part of its responsibilities. Some of the SMEDAN products and services include:
- Automotive (Component Parts Fabrication) Empowerment Scheme
- Commercialization, Empowerment Initiative (for ICT)
- Conditional Grant Scheme (CGS)
- Enterprise Network Initiatives
- Financial Empowerment for MSMEs
- Garment and Textile Cluster Growth Support Scheme
- Hewlett Packard – Learning Initiative for Entrepreneurs (HP – Life)
- Leather Cluster Enterprises Scheme
- MSME Market Linkage Initiative
- One-Local Government-One-Product (OLOP)
- SMEDAN Cloud for MSMEs
- Waste to Wealth Cluster Development and Enhancement Scheme
- Young Business Owners in Nigeria (Y-BON)
The Central Bank Of Nigeria
The CBN does not lend money directly to SMEs. However, there are several programs through which the CBN lends money to government-run development financing institutions. These institutions lend the funds to commercial banks. Through this, SMEs can borrow at cheap interest rates.
The CBN’s 220 billion Naira intervention fund (the “Fund”), for example, allocated monies to each of Nigeria’s 36 states and the Federal Capital Territory to guarantee that governors have the resources they need to help SMEs in their areas.
The Central Bank of Nigeria, through several development finance operations, provides a variety of loans to businesses across the country.
Some of the CBN products and services include:
- Anchor Borrower’s Programme (ABP)
- Commercial Agriculture Credit Scheme (CACS)
- Creative Industry Financing Initiative
- Credit Support Scheme For The Healthcare Sector
- Maize Aggregation Scheme (MAS)
- Micro, Small, Medium Enterprises Development Fund (MSMEDF)
- Non-Oil Export Stimulation Facility (NESF)
- Paddy Aggregation Scheme (PAS)
- Real Sector Support Facility (RSSF)
Micro, Small and Medium Enterprise Development Fund
The MSME Development Fund was launched on August 15, 2013, with CBN’s share capital of N220 billion. The Fund was established in recognition of the significant contributions of the Micro, Small, and Medium Enterprises (MSME) sub-sector to the economy and the existing huge financing gap.
Ten (10) percent of the Fund has been devoted to developmental objectives such as grants, capacity building, and administrative costs. In contrast, ninety (90) percent of commercial components have been released to Participating Financial Institutions (PFIs) at 2% for on-lending to MSMEs at a maximum interest rate of 9% per annum.
In line with the provisions of the Revised Microfinance Policy, Regulatory and Supervisory Framework for Nigeria, the eligible activities to be financed under the Micro, small and medium enterprises development fund include:
- Agricultural value chain, services,
- Cottage industries,
- Artisans,
- Renewable energy/energy-efficient products and technologies
- Trade and general commerce
- Technologies
- Trade and commerce and any income-generating business as may be prescribed by the CBN from time to time. (Although only 10% of the Commercial component of the Fund is channeled to trade and commerce).
Nigerian Export-Import Bank
The Nigerian Export-Import Bank is tasked with assisting in the export of goods and services from the country. A NEXIM loan is available to businesses engaged in export-related operations.
Some of the NEXIM products and services include:
- Direct Lending Facility
- Foreign Input Facility
- Local Input Facility
- Nigerian Creative Arts and Entertainment Industry Loans
- Small and Medium Enterprise Export Facility (SMEEF)
- Stocking Facility (SF)
- Women and Youth Export Facility (WAYEF)
- Export Development Facility (EDF)
- Nigeria-Africa Trade and Investment Promotion Program (NATIPP)
- Rediscounting and Refinancing Facility (RRF)
- Export Credit Guarantee Facility
- Export Credit Insurance Facility
The Bank Of Industry
The Bank of Industry’s mission is to provide long-term funding to Nigeria’s industrial sector. Agriculture, agro-processing, information and communication technology, oil and gas, solid minerals, and the creative industries are all focus areas.
- ASM Fund
- Bottom of Pyramid
- Fashion and Beauty Product
- Light Manufacturing
- Food and Agro Commodity Processing
- Graduate Entrepreneurship Fund
- Nollyfund
- On-Lending to Commercial Banks
- Solar Energy
- Youth Entrepreneurship Support (Yes) Program
- Youth Ignite Program
- BOI/CBN Intervention Fund
- Cassava Bread Fund
- Cement Fund
- Cottage Fund
- FGN Special Intervention Fund for MSME (NEDEP)
- NADDC Fund
- National Program on Food Security (NPFS)
- Rice and Cassava Intervention Fund
- Sugar Development Council Fund
- BOI/State Matching Funds
- BOI/Dangote Foundation Matching Funds
Conclusion
SMEs are the engine that propels the country’s industrial growth and development. To help the sector develop, the government should focus on fostering it by making low-interest funding more accessible to its players.