Fidelity Bank MD Makes Case for MSMEs Survival on Current 27.25% Interest Rate

The Managing Director/ Chief Executive Officer of Fidelity Bank Plc, Dr. Nneka Onyeali-Ikpe has said the business survival and sustainability of Micro, Small and Medium Enterprises (MSMEs) is not assured with the current commercial bank rate.

 

Coming a day after the Central Bank of Nigeria (CBN) Monetary Policy Committee (MPC) further raised interest rate by 50 basis points to 27.25 per cent from 26.75%. the Fidelity bank MD made this call while delivering her Keynote address at the 5th DBN annual lecture 2024, yesterday in Abuja.

 

She said: “We need to intentionally establish an SME bank.  We need to establish more developmental financial institutions like the DBN, Bank of Industry, Bank of Agriculture and we need to ensure that these agencies are very well handled because SMEs cannot do business that will impact on the growth of GDP on the commercial rates, impossible. It is absolutely impossible.

 

Also Read: Dangote Faults CBN’s 30% Interest Rate on Businesses, Economy

“The commercial rates can only be used for things like trade in and all of that, but anything that is long term cannot be done on the commercial rates. So, it’s important that we pay attention to this.”

 

Nneka said SMEs account for more than 50% of industrial employment and contribute approximately 40% to the country’s GDP. She however added that MSMEs are endangered and the failure rate is very high in Nigeria as about 80% of the small businesses in Nigeria failed within the first five years of operations.

She said according to a study carried out by PwC, there is a funding gap of $2 billion for SMEs in Nigeria. Nneka also called on the government to address over taxation, noting that multiple taxes that the SMEs have to pay is a major issue, with some of them contending with more than 10 or 20 agencies regularly.

 

Managing Director of DBN, Tony Okpanachi in his opening address disclosed that the bank has cumulatively disbursed N786 billion in loans to 494,819 Micro, Small and Medium Enterprises (MSMEs) across the country.

Okpanachi said the disbursement has resulted in the creation of 1,200,000 jobs.

 

He said as a result of the bank’s solid commitment to its mandate of driving sustainable growth, it has also aligned and supported the federal government’s priority sectors in its disbursement.

 

“For instance, N74 bn of our loans were allocated to the manufacturing sector, benefitting 3,696 end-borrowers; N38 billion to agriculture, reaching 8,163 end-borrowers, just to mention a few,” he said.

 

The MD said by establishing loan guarantee schemes, allocating funds for innovative startups, providing targeted tax breaks, and investing in essential infrastructure, the country can create a conducive environment for MSMEs to grow and prosper.