CBN floats corporate governance framework for MSMEs’ fund

In recent times, the Central Bank of Nigeria (CBN) and other implementation agencies of the Federal Government’s N220 billion fund have been perfecting moves to actualise the fund floated as a financial intervention initiative to boost the operations of Micro, Small, and Medium Enterprises (MSMEs) in the country.

The initiative by government to open the intervention funding window, according to experts, is borne out of the global recognition that micro, small, medium enterprises are veritable vehicles for poverty reduction and employment generation.

The funding window is also being implemented in line with the CBN policy reform initiative known as FSS 2020, introduced by the management of the bank to address some of the development gap existing in the country, as it relates to small businesses.

In Nigeria, the experts believe that the employment generation potentials of small businesses have been seriously hampered by lack of finance, either to start, to expand, or to modernise their scope of economic activities.

Delivering on employment generation and poverty reduction in a nation like Nigeria, where unemployment is being put at the ratio of about 30 percent of the national population of over 170 million, through the MSMEs fund option, would require multiple channels of financial services, which an improved corporate governance framework would provide.

Although the funding window has now fully open waiting for disbursements to targeted beneficiaries, however, prevailing situation surrounding the fund indicates that there are glaring obstacles that need to be addressed before the fund can be made operational.

One of the identified obstacles that need to be tackled is the need to put in place corporate governance and business standards framework to guide the operations of all the agencies that have specified roles to play in the implementation of the fund.

The apex bank’s document on the strategy for implementation of the fund, obtained by BusinessDay, reveals that the management of the fund has acknowledged this fact, and is making efforts to establish, as well as provide one-stop platform that will serve as a physical space for the MSMEs to access relevant information and support for registration.

“The one-stop platform would also provide taxation, trade, and business development support, banking services application, business services, in addition to also enable businesses to set up cost reduction with tax incentives, and the removal of stamp duties requirements.

“The MSME corporate governance and business standard framework can also be achieved through the provision of timely, diversified, affordable, and dependable financial services to the economically active poor, and enhancement of service delivery to micro, small, and medium enterprises (MSMEs).

“Therefore, it is imperative for the corporate governance and business framework to be developed and designed to achieve the identified objectives and benefits,” the document explains.

The insightful conclusion obtainable from the document is that the benefits of the corporate governance and business standards, ranges from: enhancing quality and credibility of the participating MSMEs.

Other benefits are that it will promote access to finance, ease operation to set up, enable integration with international market, and facilitate entrepreneurship. Some of the deliverables are: corporate governance, and business standards frameworks, IFRS accreditation tailored for MSMEs, and create standards institutes.

On the other hand, some of the risks involved are: the challenge of working with various agencies, streamlines registration requirements, resistance to removing stamp duties requirement and reducing taxation burden for MSMEs.

Participating national and international agencies involved in implementation of the fund are: Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), CBN, funding agency; Federal Ministry of Trade and Investment; FIRS; CAC; SON; NAFDAC; Federal Ministry of Finance provides technical supporting, and funding.

Other participating institutions and agencies are: Deposit Money Banks, funding agency, Bank of Industry, funding agency, NEXIM, funding agency, World Bank, provides technical supporting agency, and GIZ, technical support.

Before the paradigm shift by government, which led to the establishment of the MSMEs fund, there have been so many outcries by Nigerians against the mounting incidences of poverty. The rejection of poverty as a phenomenon of life has become intense in the country because of the huge available human and material potentials, which the nation is endowed with.

According to the World Bank, “nearly half of the 7 billion people in the world live on less than $2 a day; about a fifth live on less than $1 a day – the category into which most Nigerians find themselves.”

Poverty is a deprivation that manifests in the form of acute shortage of certain basic things needed for comfortable living, and the inability of most economically active, but poor Nigerians to access finance has been identified as the chief factor fuelling poverty in the country.

The floating of the MSMEs fund is expected to create access for over 10,000 small business operators identified to be playing in the MSME sub sector of the Nigerian economy.

ADEOLA AJAKAIYE