Why Banks Cannot Give Loans To SMEs—FG

November 11, 2016
Why Banks Cannot Give Loans To SMEs—FG


By Modupe Gbadeyanka

Minister of State for Budget and National Planning, Mrs Hajiya Zainab Ahmed, has explained why it has become difficult for banks in Nigeria to lend money to Small and Medium Enterprises (SMEs).

The Minister, while answering questions at the 5th EU–Nigeria Business Forum on Friday in Lagos, blamed this on Federal Government’s indebtedness to some of these financial institutions through local borrowing.

She said because of this, it was almost impossible for banks to give money to small business owners to grow their enterprises.

“Banks are not able to borrow to SMEs because government is heavily borrowing from them. Eighty percent of Nigeria’s domestic debt comes from commercial banks and this has made it difficult for them to fund SMEs,” the Minister said.

At the forum on Friday, the theme ‘Harnessing Nigeria’s Potential for Economic Growth; was the main focus, aimed at highlighting challenges faced by SMEs in the country.

Participants unanimously agreed that it have been hard for SMEs to access funds from commercial banks.

But Mrs Ahmed assured that the FG was working with development partners and the International Finance Corporation (IFC) to ensure that it secured loans from abroad.

According to her, government was doing everything possible to ensure real GDP growth rate of about 3-4 percent by 2017, noting that the continued help of the European Union was needed to achieve greater goals.

Modupe Gbadeyanka

Modupe Gbadeyanka is a fast-rising journalist with Business Post Nigeria. Her passion for journalism is amazing. She is willing to learn more with a view to becoming one of the best pen-pushers in Nigeria. Her role models are the duo of CNN's Richard Quest and Christiane Amanpour.

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