Strengthening Access to Finance for Micro, Small and Medium Enterprises (MSMEs) in Nigeria
We are pleased to present the premier edition of our Micro, Small and Medium Enterprises (MSME) Study in Nigeria – titled: Strengthening access to finance for MSMEs in Nigeria, a collaborative effort of KPMG Nigeria and Enterprise Development Centre, a centre of the Pan Atlantic University. The survey which polled over 3,000 entrepreneurs, 18 banks and government/ multilateral agencies was conducted between November 2013 and March 2014. The survey reflects both the SMEs and banks’ perspectives on the primary issues affecting the growth of this critical sector.
Globally, access to finance is a critical success factor in the growth and development of the MSMEs, and available statistics show that in the developed countries of the world, MSMEs are responsible for being the major drivers of growth in their economies. The existence of an environment that is conducive to doing business is very important in this regard and partly responsible for this development in developed countries.
Nigeria cannot afford to be an exception if she intends to be in the top 20 economies of the world by year 2020 according to Vision 20:2020, the nation’s economic blueprint. However, the development of MSMEs in Nigeria and their overall contribution to the economy are hampered by the fact that access to finance still constitutes a major obstacle to growth.
Over the years, traditional sources of financing for MSMEs have revolved around personal savings, loans from friends and family, and other informal sources. This scenario presents a conundrum as the impact of these sources of funding altogether represents only a fraction of the available potential when banks and the government become major contributors of MSMEs financing. This report seeks to chart a course towards analysing the major impediments to MSME growth in Nigeria; one of which is access to finance and the issues impacting MSME’s ability to effectively increase their contribution to the economy.
It goes without saying that strengthening access to finance for MSMEs requires the active participation of all the major players including the MSMEs, banks, other financial institutions, and the government. Therefore, this study also examines the role of each stakeholder in the process and seeks to find a rallying point where all the efforts of the stakeholders can become a more cohesive front, which will translate into positive growth and development for the Nigerian economy going forward. The recommendations in the report are based on iterative discussions with the major stakeholders and supported by analytical evaluation of the situation from relevant data.
In discussing the problem of access to finance by MSMEs, the report presents a balanced view clearly analysing the roles, contributions and expectations of all key stakeholders.
We would like to thank those who participated in this survey and hope the findings are insightful and useful to you in understanding the challenges faced by both the supply and demand side in SME financing.
Download Strengthening Access to Finance for Micro, Small and Medium Enterprises (MSMEs) in Nigeria:Download