Nigeria's Central Bank moves aggressively to support MSME financing

28 August 2013 --

People who pay attention to what Financial Access is up to will have noticed that we are heavily engaged in promoting MSME (micro-, small- and medium-sized enterprise) financing in East Africa.  Our office in Nairobi is heavily engaged in programmes to bring banks closer to MSMEs, and in particular to agricultural SMEs and producer organisations.  Over the past couple of years we have worked especially closely with the IFC in this area, as well as Bank of Africa affiliates in the region.  Currently, we are developing a multi-year programme involving many Kenyan financial institutions in this connection, and scaling-up massively the outreach to rural entrepreneurs and producer organisations such as co-operatives, credit unions, and the like.  Making these supply chains financially transparent and sustainably constructed is a major goal.

But West Africa is doing its bit as well, and in particular the Nigerian authorities -- championed by Governor Sanusi in the Central Bank, one of the most dynamic and savvy emerging markets regulators around -- are leading the charge.  The Nigerian CB led the charge on sustainability in banking, and is now again way out front in the area of designing sensible programmes to encourage agric- and MSME lending.  Make no mistake, in the past the authorities have tried this before, with generally dismal results.  The main banks regarded portfolio targets for SME lending as a "tax", and basically dumped loans into any convenient vehicle, provisioning them more or less up front.  Times have changed.  Now serious thinking is going into the design and impact of incentive programmes to stimulate lending to underserved segments, and particularly the MSMEs of Nigeria, who in common with the rest of Africa account for most employment, dynamism, and potential for mobility in the economy.

For more details on the CBN's most recent thinking, read the enlightening summary of a recent seminar as reported in the Daily Independent, in the link below.

-- Jan Cherim

CBN moves to strengthen SME growth, enhance access to financial services | Daily Independent | Nigerian Newspapers

I was alerted to this by an IFC-sponsored LinkedIn group called SME Finance.  Look it up.