Reflections on the New CBN Credit Revolution, By Nasiru Suwaid

Nasiru Suwaid

Let us hold the old adage true that a person who does not produce cannot generate wealth nor should her or her require the trust of a supporting credit. This honoured truth made sense in the context of the subsistence nature of our cultural livelihood before time, and remained permanently etched in our traditional entrepreneural spirit.

This is why the waking mood of a Nigerian entrepreneur is characterized by a yo-yo swing because they are generally unable to make long term projections largely on account of the protean pace of  public policies that changes at the instinct and whims of officials, but often devoid of the substantive needs of the man on whose behalf the policy had been conceived .

Reflecting on one of such polices, the recent announcement from the Central Bank of Nigeria setting aside the sum of N220 billion Naira to fund Small and Medium Enterprises comes straight to mind. I am here thinking of the small entrepreneur whose business would demands an itinerant schedule, and I am wondering how he would be a likely beneficiary of this most progressive government initiative? Here the focus is not on account of  any discriminatory hint in the economic policy, but due to the harsh reality of his/her occupational culture, which comes in sharp conflict with the tradition in the banking community that only sees and situates loan-able trades desrving of credit support within the narrow prism of say, a manufacturing venture.

I am talking seriously here of an institutional thing, as well as a mindset,  where credit desk officers and bankers, only give listening ears to individuals and persons managing or operating a solid manufacturing concern, because of some presumed claim and general expectation that it is such entrepreneurial activities that are ultimately viable to create wealth.

The truth, of course, as we have all come to see it is that in a real world beyond presumption, many a manufacturing enterprise, are no more than statuesque presences, if I may use a cold reference.  We have ubiquitous evidence of industrial complexes or premises which initially served as dependable collaterals to many risk managers, which today are sad commentaries of the consequences of a loan repayment programme that had gone sour.

As enumerated during the epoch making event of this new CBN initiative, the Governor of the Central Bank of Nigeria, Mallam Sanusi Lamido Sanusi, authoritatively submitted an analytical trend of the percentage share of credit granted by commercial banks to Micro, Small, and Medium Enterprise in a decade of declined funding of this primary business sector of the economy.

The statistics is abysmal. Starting from the year 2003, we witnessed a recorded 7.5% percentage of availed credit facility to small enterprises, to less than 1% percentage of loans granted by the year 2006, leading to the measly 0.1% of percentage credit granted by the year 2012.

Technically, the inference is strong that the willingness of commercial banks to make lending to small business is proportional to the ability of the small investor or business person to seek for such loan, which is a different picture from a manufacturing entrepreneur who wishes to draw such a facility, to direct, organize or participate in the mechanized art of industrial production.

It is pertinent to note that the decade of decline in industrial financing corresponded with the period when the manufacturing industry in the nation nearly collapsed as a viable sector, as most of the re-known axis of industrial production in Nigeria, nearly became a relic of a distant past.

From the Kano-Kaduna-Abuja axis to the Onitsha-Aba-Port Harcourt axis, it was a single story of abandoned complexes and deserted areas, except, perhaps the Lagos-Ogun axis which remained as ever vibrant, especially, because the industries that were there are more of multinational conglomerates, that never lacked access to much needed capital, as foreign interventions were always available, and because the industries were large incorporations, most banks found it a novelty by association, to make available to them the much desired credit funding.

Of course, the new CBN epochal initiative, like all things revolutionary, had factored the probability of the enumerated problems, posing a serious threat to the actualization of an easy access to credit in Nigeria. Thus, the policy came with the establishing of micro finance banks as appropriate vehicles for the dispensation of such loans. It also revised the types of property, which could constitute adequate collateral to for granting a loan, and these include the generally accepted permanence of a landed property, to the now officially recognized moveable property, capable of withstanding the scrutiny of becoming asset worth being pledged to secure a credit facility.

Also, the provision of wholesale financing windows at a reduced cost to participating financial institutions, improving the capacity of Primary Financing Institutions to meet credit needs of micro, small and medium enterprises and enhancing access of women entrepreneurs to credit by allocating 60% of the funds to them. It is noteworthy that part of the targeted funds will be channeled to agriculture and women in farming vocation.

The simple truth about Nigerian economy is the fact that it imports almost everything, as its entrepreneurs do not manufacture goods nor invent products.  Sad to say, they trade on the exports of other nations, which includes, most surprisingly, foodstuffs. Thus, any credit policy that wishes to succeed, must integrate the trader and vendor community, by granting them loan facility, with a proper mentoring incentive to wean them from their established business styles as middlemen, into the expected realm of production and in this regard, Alhaji Aliko Dangote, the Chairman of Dangote Group, is a perfect exemplar; starting from trading to importing and packaging, and finally reaching the ultimate of a manufacturing entrepreneur per excellence, with the added notification of being the richest black man on earth in excess of $20 billion dollars.


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