The Abuja Chamber of Commerce and Industry (ACCI) has urged the Federal Government to urgently resolve the defective funding mechanism for the Micro, Small and Medium Enterprises (MSMEs) for economic development.
ACCI President, Prince Adetokunbo Kayode, made the call at the official opening of the 2019 Abuja International Trade Fair (AITF), on Monday at the Abuja International Trade and Convention Centre, Abuja.
Kayode, said that the defect must be resolved expeditiously, because at the last count, government had about 21 intervention funds with billions of Naira committed but very minimum impact either in terms of quantum or quality.
“Over the years, the Federal Governments through the Central Bank of Nigeria (CBN) made substantial funds available for MSMEs.
“However, issues associated with the disbursement in terms of collateral, interest rates and short term nature have contributed forces to dwindle the marginal efforts to fund MSMEs.
“Funding through the commercial banks has proved unproductive. The commercial banks are not programmed or structured to do long term funding or capital investment. They are into short term, quick return deals.
“So why do we continue to pass development funds through commercial banks, where experience has taught us that the essence and the aim of government is frustrated and or thwarted.
“We will consequently urge government to consider and agree to a special funding vehicle for MSMEs through the Organised Private Sector (OPS),” he said.
The President also appealed to the government to embark on Finance Leasing, which could provide for direct procurement of Capital Equipment (CAPEX) by funding agency to the MSMEs.
He also called for the provision of only Operational Expenses (OPEX) as against the prevailing instance where direct cash given become exposed to diversion into several other concerns.
“Since CAPEX is usually about 80 per cent of total capital requirement, this leads to a de-risking of the facility up to about 80 per cent, especially with the covering of cost for delivery, installation, maintenance and insurance.
Kayode disclosed that an OPS driven MSMEs funding Direct Foreign Investment (DFI) would soon be proposed to CBN governor by the National Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) for greater consideration.
“The second main challenge is the problem of multiple taxation and grey taxation procedures, which include corporate tax, stamp duties, property tax, tenement rate, infrastructure charges, environmental charges, water rates, among others.
“Businesses pay appropriate taxes and municipal charges. But multiple taxations kill MSMEs; so also unearned and destructive charges on loans to MSMEs like stamp duties, registration fees, consent fees and Corporate Affairs Commission fees.
He lamented that governments, at every level, continued to take up to 10 to 15 per cent of part of loans granted to MSMEs in the name of consent fees, stamp duties, title registration fees, filling fees at the CAC.
According to him, banks also collect another 10 per cent more through administrative charges and documentation costs. All these have to stop in the interest of the economic development of this country.
Speaking on the trade fair, Kayode said it remained most vibrant multi-sectoral event for international and domestic exhibitors to promote and showcase new products, innovations, strategic direction in their area of interest, access new markets and deepen or sign business deals.
Hajiya Saratu Aliyu, National President of NACCIMA hoped that the deliberation at the 14th edition of the fair would also come out with an outcome document, `The Abuja Declaration and Programme of Action for Innovative Financing of MSMEs’.
“It has been observed that liquidity is not in short supply within the financial system in Nigeria, but it is a well-known fact that banks are generally reluctant to grant loans to MSMEs.
“If they do, the lending rates are too high, and they drive MSMEs away. It is against this backdrop that the Federal Government comes up with financing programmes and options for MSMEs, through some institutions.
`But the question is how easily accessible are the funds under these initiatives? That is the core problem.
“We are calling on government to simplify these procedures to enable access these credit facilities so MSMEs can tap into them.
The fair with its theme: “Remodelling MSMEs Financing Options and Solutions” features foreign and local exhibitors including the Nigerian Army, which exhibited made-in-Nigeria equipment such as mines detector, Armour Tank, borehole driller and fuel less generator.