The lack of financial support is unarguable, top on the list of the recurring challenges faced by SMEs in Africa. This gap between the finance available to SMEs and the finance that they need to attain their full potential is further widened by the competitive market for the limited supply of investors’ funds.
This survey conducted by PwC back in June this year revealed yet again that after all these years, securing financial support for their businesses remains the most pressing problem that MSMEs currently face. This problem of access to finance has persisted for many years. Business funding can be sourced through various avenues and as the owner of an SME in Nigeria, there is a need to enlighten you on the various ways you can secure financial support from SMEDAN for your business.
The Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) is a government sanctioned agency, created by an Act in 2003 and tasked with directly piloting the affairs of the SMEs sector. Its goal is to promote the growth of the Micro, Small and Medium Enterprises (MSME) sector of the economy. The agency achieves this goal by helping Small businesses and entrepreneurs have access to loans, professional advice and the training they need.
This is crucial because the SME sector is the backbone of Nigeria’s economy. The more these small businesses are furnished with the financial support they need, the more rapidly the Nigerian economy would grow. Now as far as financial support goes, while SMEDAN occasionally disburses some loans itself, more often than not, the agency simply acts as a middle man.
This it does by creating a pool of loans accessible to small businesses and entrepreneurs from different providers and giving small businesses access to these loans through its platform. All loans offered by SMEDAN itself and the fund providers in its pool can be accessed through the SMEDAN credit information portal and every micro, and small business owner in Nigeria can apply. These are some of the ways you can secure financial support for your business through SMEDAN:
The Conditional Grant Scheme
SMEDAN recently commenced the registration of Micro, Small and Medium Enterprises (MSMEs) in the country. The exercise aims to facilitate the development of a comprehensive database of MSMEs in Nigeria to enable stakeholders in the private and public sectors to provide the necessary support, tailored to the needs of SMEs.
A business registered with SMEDAN will have a Unique Identification Number (SUIN), and it will also have access to SMEDAN’s Conditional Grant Scheme up to N50,000. Asides from this grant, the registered business will also enjoy priority funding from both internal and external sources through SMEDAN.
The Conditional Grant Scheme of the Federal Government was inaugurated by SMEDAN and seeks to promote the activities of SMEs across the country by providing them with entrepreneurship training, business name registration, micro-insurance and financial grant of fifty thousand naira each.
Even if your business financial needs exceed this sum, the conditional grant will really go a long way to supporting your business while you pursue other plans. What’s more, registration is free of charge and can be done at your convenience. If you are an SME business owner, you can qualify for this grant today by registering your business with SMEDAN. To register, all you need to do is click here.
SMEDAN Matching Fund Program
The Matching Fund programme engineered by SMEDAN is geared towards improving the access of small businesses here to affordable financial support, reducing the interest rates for MSMEs financing, improving the confidence of financial institutions in lending to MSMEs and ultimately enhancing overall output and wealth creation.
Labour-intensive small businesses and micro or SMEs operating in the real sector with innovative value-added products are some of the targeted beneficiaries of this program. Qualified enterprises here also include those small businesses utilising local raw materials and capable of generating employment for at least 2-5 additional persons as a result of the loan obtained.
Bank of Industry Loans
The Bank of Industry (BOI) is a major development financier set up by the Nigerian government in conjunction with the CBN to finance the SME sector. In fact, BOI has a mandate of making financial assistance available to MSMEs because it isn’t a commercial bank. It specifically targets SMEs under the manufacturing and processing sectors of the Nigerian economy.
To qualify for these loans from BOI, you need to check the following boxes:
a. You must be classified as an SME in Nigeria.
b. Your business must either be new or existing and must be seeking modernisation, expansion, or diversification.
c. You must be credit-worthy and can contribute a minimum of 25 percent of a project cost.
d. You must be of proven character and demonstrate the ability to repay loans.
Role of SMEDAN
The BOI works in conjunction with SMEDAN for the disbursement of its loans. This means that businesses that are registered under SMEDAN enjoy preferential treatment regarding this loan.
Bank of Agriculture Loans
The Bank of Agriculture, popularly known as the BOA, is another finance institution focused on development by providing financial aid to businesses in the agricultural sector. The BOA is owned and controlled by the Federal Government of Nigeria and offers two major types of loans. The first is the agricultural loan that is designed to cater to SMEs in the agricultural sector or across the Agriculture Value Chain.
The second loan provided by the BOA is the microloan which is credit financing for both agricultural and non-agricultural business activities. Just like the name implies, it is provided for micro activities and carters to arable farmers, artisans, traders, or livestock farmers alike.
The Role of SMEDAN
SMEDAN acts as the matchmaker here by disbursing the BOA financial support to where it is needed. The minor catch here is that you need collateral for this loan but then again, just like the other loans that you get through. In addition, when you register with SMEDAN, you are liable for preferential treatment.
The Agri-Business/Small and Medium Enterprise Investment Scheme is an initiative to support the Federal Government’s efforts and policy measures for the promotion of agricultural businesses and small/medium enterprises (SMEs) as vehicles for sustainable economic development and employment generation.
The loans are to be provided in partnership with the Central Bank of Nigeria (CBN), and the goal here is to ensure access to finance for SMEs, generate more employment opportunities in Nigeria. Also, to boost the managerial capacity of Agribusiness/SMEs as pipelines of growing enterprises that can become large corporate organisations.
The Role of SMEDAN
The role of SMEDAN in the disbursement of this scheme is simple: a SMEDAN participation certificate is a requirement to access the loan will be provided for participants in the programme.
SMEs in Africa as a whole are crucial to the economies of all African countries. They account for a staggering amount of the national income, are relatively small and are thus often more flexible and quicker to innovate than larger companies. Indeed, SMEs are often thought to be better at embracing new trends and technologies. It is important to any economy that this occurs. We want all SMEs in Africa to flourish sooner rather than later. If your business operates in Nigeria, we hope you follow some of these steps to get financial support for your business from SMEDAN or any of the fund providers in its pool.