MSME Rating Database Planned 06/24/2011
SMEDAN, in collaboration with Dun and Bradstreet, a world leading source of commercial information and insight on businesses, is planning to establish a National Micro, Small and Medium Enterprises (MSMEs) Rating Database to provide a common standard for evaluating, categorizing and monitoring the performance of SMEs in the country.
The proposed rating database is to serve as a catalyst for SME growth, access to finance and job creation in Nigeria, with a view of assisting financial institutions with a standard and reliable mechanism to support due diligence procedures for MSME lending.
The proposed rating database is to serve as a catalyst for SME growth, access to finance and job creation in Nigeria, with a view of assisting financial institutions with a standard and reliable mechanism to support due diligence procedures for MSME lending.
Speaking at a Stakeholders Forum and Executive briefing at the SMEDAN Headquarters in Abuja, the Director-General of SMEDAN, Alhaji Muhammad Nadada Umar said that the Agency aims to promote free information flow between the commercial and development banks and other specialized funding agencies in providing credit to MSMEs through the scheme.
‘’The rating database’’ he said, ‘’will institute a reliable process and benchmark to assess and rate Nigerian MSMEs based on standardized criteria and policies thereby providing reliable database for funding decisions by financial institutions. With this service, MSMEs that are duly registered and rated in the database will have easier access to funding’’.
Alhaji Umar added that already, SMEDAN, in partnership with the National Bureau of Statistics is putting mechanisms in place to formalize SMEs in the informal sector with a view of facilitating their access to loans with the lowest interest rates, urging the Central Bank of Nigeria to assist the efforts in this regard.
While commending the apex bank for earmarking 200 billion Naira for the SME Credit Guarantee Scheme, he urged it to do more to save the sector from heavy reliance on imported technologies just as he recommended that the federal government inject looted funds which it has recovered into the development of MSMEs in the country.
The rating database, which has been successfully established by Dun and Bradstreet in related economies like India, Bangladesh and the United Arab Emirates, will assist the growth of ‘strong’ MSMEs that maintain impeccable track business performances over time and will also serve as a foundation for continuous monitoring of MSMEs in the country.
Furthermore, the scheme is expected to create the conducive environment needed for MSMEs, especially the ‘weak’ ones, to develop, reduce transaction time and cost for commercial banks to assess MSMEs for credit facilities, and encourage financial support from international donor agencies and improve trade opportunities.
In his detailed presentation of the scheme, Mr. Richard C. Opara of Dun and Bradstreet Nigeria, emphasized that for it to succeed, the proposed rating database must be centralized for easy access, it must be nationally accepted and consistently applied, adding that the scheme on a larger scale, would promote nation-building whereby bright ideas from developers who might not have the necessary funds would be presented with the opportunity to translate their ideas into reality and sustain them over the years.
‘’SMEs have come to be recognized as the primary drivers for job creation in the economy as they make up about 80 percent of the population. With such a huge percentage of the population in the informal sector, the main barriers to their growth among other challenges remain accessible finance and lack of infrastructure.
‘’ These challenges have persisted because financial lenders have too many requests from people who have the zeal to establish businesses, but who do not have upfront collateral to secure the loans needed to finance such ventures. No bank wants to deal with a ‘weak’ company whose information is insufficient or untraceable, hence, the significance of the database’’.
He proposed for the establishment of a Stakeholders Coordination Committee which would oversee the planning and execution of the scheme while expressing confidence that with SMEDAN and other relevant stakeholders, the informal sector can be driven to move the economy forward.
The Forum was attended by representatives from the Central Bank of Nigeria (CBN), Bank of Industry (BOI), Unity Bank, Ecobank, Nigerian Export and Import Bank (NEXIM), Bank of Agriculture, Federal Ministry of Commerce and Industry, First Mutual Microfinance Bank, National Boundary Commission and SMEDAN.
Prepared by Levi Anyikwa, Assistant Director (Corporate Affairs)
‘’The rating database’’ he said, ‘’will institute a reliable process and benchmark to assess and rate Nigerian MSMEs based on standardized criteria and policies thereby providing reliable database for funding decisions by financial institutions. With this service, MSMEs that are duly registered and rated in the database will have easier access to funding’’.
Alhaji Umar added that already, SMEDAN, in partnership with the National Bureau of Statistics is putting mechanisms in place to formalize SMEs in the informal sector with a view of facilitating their access to loans with the lowest interest rates, urging the Central Bank of Nigeria to assist the efforts in this regard.
While commending the apex bank for earmarking 200 billion Naira for the SME Credit Guarantee Scheme, he urged it to do more to save the sector from heavy reliance on imported technologies just as he recommended that the federal government inject looted funds which it has recovered into the development of MSMEs in the country.
The rating database, which has been successfully established by Dun and Bradstreet in related economies like India, Bangladesh and the United Arab Emirates, will assist the growth of ‘strong’ MSMEs that maintain impeccable track business performances over time and will also serve as a foundation for continuous monitoring of MSMEs in the country.
Furthermore, the scheme is expected to create the conducive environment needed for MSMEs, especially the ‘weak’ ones, to develop, reduce transaction time and cost for commercial banks to assess MSMEs for credit facilities, and encourage financial support from international donor agencies and improve trade opportunities.
In his detailed presentation of the scheme, Mr. Richard C. Opara of Dun and Bradstreet Nigeria, emphasized that for it to succeed, the proposed rating database must be centralized for easy access, it must be nationally accepted and consistently applied, adding that the scheme on a larger scale, would promote nation-building whereby bright ideas from developers who might not have the necessary funds would be presented with the opportunity to translate their ideas into reality and sustain them over the years.
‘’SMEs have come to be recognized as the primary drivers for job creation in the economy as they make up about 80 percent of the population. With such a huge percentage of the population in the informal sector, the main barriers to their growth among other challenges remain accessible finance and lack of infrastructure.
‘’ These challenges have persisted because financial lenders have too many requests from people who have the zeal to establish businesses, but who do not have upfront collateral to secure the loans needed to finance such ventures. No bank wants to deal with a ‘weak’ company whose information is insufficient or untraceable, hence, the significance of the database’’.
He proposed for the establishment of a Stakeholders Coordination Committee which would oversee the planning and execution of the scheme while expressing confidence that with SMEDAN and other relevant stakeholders, the informal sector can be driven to move the economy forward.
The Forum was attended by representatives from the Central Bank of Nigeria (CBN), Bank of Industry (BOI), Unity Bank, Ecobank, Nigerian Export and Import Bank (NEXIM), Bank of Agriculture, Federal Ministry of Commerce and Industry, First Mutual Microfinance Bank, National Boundary Commission and SMEDAN.
Prepared by Levi Anyikwa, Assistant Director (Corporate Affairs)
