CIBN Conference: Ajibola Highlights Importance of MSMEs in Economy Recovery

CIBN Conference: Ajibola Highlights Importance of MSMEs in Economy Recovery

The President, Chartered Institute of Bankers of Nigeria, Prof. Segun Ajibola, says the financial services sector must redirect the economy to the path of recovery by channeling a major part of their loan portfolio to Micro, Small and Medium Enterprises financing. He spoke in Abuja at the 10th edition of the Annual Banking and Finance Conference, tagged, ‘Innovation in the financial services sector: Driving Nigeria’s new economy.’

Ajibola noted that the economic recession in the country could be  traced to years of “skewed economic structure” as manifested in the  monolithic nature of the source of Federal Government foreign exchange  earnings.

 

He said, “Our economy has been overstretched with  the level of foreign exchange reserves hovering around $25bn, perhaps  the lowest in recent decades and barely able to support six months  import bills.

I believe this is the time the financial  services sector needs to play some catalystic roles to redirect the  economy path of recovery, growth and development.”

In a bit to  recover the economy, Ajibola stressed the need to give MSMEs necessary  support through a lasting initiative modelled after countries like  Malaysia and South Korea.

 

The CIBN President said, “Nigeria  has experimented with multitude of policies and programmes aimed at  supporting this lower end of the economy with minimal results.

 

“Perhaps,  one way of entrenching a lasting initiative is to benchmark the models  already successfully implemented in countries such as India, Malaysia,  South Korea and Indonesia where the contribution of micro businesses to  the GDP hovers around 75 percent. He added, “South Korea, for example,  recovered from the Asian Financial Crisis of 1997 through the SMEs. In  1999, the SMEs accounted for 81.9 percent of industrial employments and  74.3 percent of total manufacturing in the country.

“We should  also be prepared to accept the truism that the promotion of this  segment of the economy can succeed if only the various institutions and  agencies provide their complementary roles of providing the enabling  environment, infrastructural base and funding support.”

 

Earlier,  the Governor, Central Bank of Nigeria, Mr. Godwin Emefiele, in his  Keynote address, had emphasized the importance of an improved payment  system to sustainable economic growth.

He noted that the  successes recorded in the e-payment space in the country were made  possible through programmes aimed at migrating transactions from cash to  electronic payments.

 

Emefiele said, “In order to sustain this  progress, the CBN launched the second the second phase of the National  Strategy in September 2013, aimed at ensuring safety, improving  efficiency and integrating effectively into the global payments system  through compliance with international standards.

The CBN  governor stated that Nigeria’s transaction-to-fraud rate had dropped  significantly in 2015 to 0.01 percent, representing a 63 percent  reduction.

This post first appeared on Linda Ikeji's Blog. Read the original story here.

Source: CIBN Conference: Ajibola Highlights Importance of MSMEs in Economy Recovery