MSMEs N482 Billion Disbursement by the Development Bank – UPDATES!!

At the time its inception occurred, MSMEs N482 Billion Disbursement by the Development Bank of Nigeria (DBN) took place, which is Nigeria’s primary wholesale development finance institution. Approximately 65% of the sum was reportedly given to women and youth-owned businesses.

The DBN’s Managing Director, Mr. Tony Okpanachi, assured stakeholders during the presentation of the financial summary for 2021 that the bank’s fundamentals remain firm.

He said of the bank’s financial performance

“It’s solid corporate governance framework, business strategy, as well as top-notch enterprise risk management, paired with a highly committed board, management, and staff,” 

According to him, the Bank has remained straightforward on its mission of offering access to finance to Nigeria’s most essential, but, poorly served micro, small, and medium-scale enterprises through participating financial institutions, including offers of partial credit guarantees to motivate lending to MSMEs.

“We are particularly pleased by our cumulative disbursement of N482 billion, particularly to women-owned or managed enterprises,” the MD said.

The MSMEs Survival Fund from the Development Bank

He thanked the bank’s shareholders, development partners, PFIs, board of directors, and employees for their continuous support, promising to stay focused on the bank’s mandate and continue efforts to provide MSMEs with long-term finance and capacity building.

Dr. Dikko Radda, Director-General of the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), stated this at a roundtable discussion organized by TADI in cooperation with SMEDAN in Abuja.

Both the public and private sectors have roles to play in the sustainable development of MSMEs in Nigeria, according to the SMEDAN DG, who was represented by Wale Fasanya, Director of Planning, Research, Monitoring, and Evaluation.

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According to him, the agency’s conditional grant program has benefited 20,230 microbusinesses.

According to the 2021 MSME Survey, there are 39 million MSMEs in Nigeria,” the SMEDAN DG added. This represents a substantial decrease from the 41 million MSMEs recorded in the 2017 Survey Report.

The COVID-19 epidemic, obstacles MSMEs face in acquiring financing to establish or grow their businesses, and globalization issues are all contributing to the decline in the number of MSMEs.

“Power, funding/finance, tax, and security are the top priority areas of help for MSMEs, according to the 2021 MSME Survey Report.”

SMEDAN, he assured it will continue to make sure that everything that needs addressing to boost this critical sub-sector is done.

SMEs Overview

Small & Medium Enterprises handles a major role in most economies, more especially in developing countries, which might include Nigeria. SMEs gives account for the majority of businesses all over the world.

And also, SMEs serve as important contributors to job creation & global economic development. The program represents up to 90% of businesses & over 50% of employment globally.

The previous SMEs added their own contribution, which amounted to 40% of the national income  (GDP) in developing economies. And the numbers grow higher when informal SMEs are added.

Based on our estimates, 600 million jobs will be in demand by 2030 in order to absorb the growing global workforce, and this makes SME development a high priority for governments around the globe.

Meanwhile, in growing markets, most likely, formal jobs are formed by SMEs, and it develops about 7 out of 10 jobs.

On the other hand, access to finance is a key constraint to SME growth. It comes as the second cited obstruction that faces SMEs for their business to grow in developing markets & countries.

SMEs have access to obtain bank loans more than large firms, instead of relying on internal funds, or cash from friends and family, to launch and initially improve their start-up enterprises.

The International Finance Corporation (IFC) estimates that 65 million firms, or 40% of formal micro, small and medium enterprises (MSMEs) in developing countries, have a financial need of $5.2 trillion, which is needed to be offset and equated to 1.4 times the current level of the global MSME lending.

East Asia and the Pacific account for the largest share (46%) of the total global finance gap and are followed up by Latin America and the Caribbean (23%) and Europe and Central Asia (15%).

The volume space varies considerably from region to region. Latin America and the Caribbean and the Middle East and North Africa regions, in particular, have the highest proportion of the finance gap when compared to potential demand, measured at 87% and 88%.

Moreover, up to half of formal SMEs do not have access to formal credit. The financing gap is wider when micro & informal enterprises are considered.

Frequently Asked Questions about MSMEs’ N482 Billion Disbursement by the Development Bank

What is the Meaning of MSMEs?

The static meaning of MSMEs is Ministry of Micro, Small, and Medium Enterprises.

What is the importance of MSMEs in the Indian economy?

The importance is to create job opportunities, and possibilities, and contribute to the development of the country’s setbacks, and under-developed areas in the country.

MSMEs seem to be contributing about 8% of the country’s GDP, about 45% of manufacturing production, and up to 40% of exports.

Who is eligible for MSMEs loans?

Micro, Small, and Medium Enterprises offer MSME loans for the expansion of businesses or for starting up new enterprises.

The IR on MSME loans starts at 7.65% p.a. The loan amount sanctioned ranges from as low as Rs. 50,000 and can increase to a few crores.

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