Politics and Governance - More Than A Conversation

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Bottom Line
Fiscal Policy
and the Nigerian
Entrepreneur
“
In the 2017 financial year,
the Bank of Industry
facilitated the disbursement
of ₦11.1 Billion in loans
to 205,863 beneficiaries
of the scheme which
includes the unbanked
and underbanked groups
of market women, traders,
artisans, youth
and farmers.
“
The impact of the fiscal policy on SMEs and the general
Nigerian Entrepreneur as it relates to raising capital.
BY OLUWASEUN SMITH
As many small business owners in Nigeria will tell you, finding
capital is tough. Equity capital limits one’s savings, or what
one can raise from loved ones. The demand placed on the few
sources of institutional equity funding is well over the capital
they have available to invest. Additionally, only a small fraction
of capital from institutional investors in Nigeria goes towards
helping small businesses. They’d rather fund medium-sized
companies that are already cash flow positive. Regarding debt,
financing from financial institutions has been historically difficult
to access for MSMEs, although that seems to be changing
with the introduction of interventions from newly established
Development Finance Institutions such as the Development
Bank of Nigeria and the Lagos State Employment Trust Fund.
The Buhari administration has raised the right issues about
access to finance for startups and SMEs, but it’s unclear the
extent to which this has been backed up by its policy positions.
So, to what extent has this administration invested in solving the
access to finance problem for MSMEs through their fiscal policy?
The administration has invested some funding indirectly
increasing access to finance through its Social Investment
Programmes. But there are questions about the efficacy and
sustainability of programmes like MarketMoni, TraderMoni,
and FarmerMoni). In 2017, the Bank of Industry facilitated the
disbursement of ₦11.1 billion in loans to 205,863 beneficiaries
including the underbanked groups of market women, traders,
artisans, youth and farmers. That’s an average of ₦54,000 naira
per beneficiary to less than 0.3% of the 77 million MSMEs in
Nigeria, meaning that the programme has more of a social
impact focus than trying to honestly address the broad-based
funding problem faced by Nigeria’s SMEs. It’s uncertain whether
the beneficiaries will pay back or even if the programmes can
ever become self-funding.
In 2017, the FG invested ₦40.6 billion as equity contribution
towards the take-off of the Development Bank of Nigeria with
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