Support for SMEs now urgent, says Heritage Bank
HERITAGE Bank Limited said there is no better time to support the nation’s fledgling Small and Medium Enterprises (SMEs) sub-sector than now when the tide of economic challenges and environmental uncertainties is on the rise.
The urgency, according to the bank, has become necessary as the plight of an estimated 17 million Nigerian SMEs heightened, with only 10 per cent of them having access to finance.
The bank’s Managing Director and Chief Executive Officer, Ifie Sekibo, who made the observation at the launch of a finance package called Paris Klub SME on the sidelines of its Micro Small and Medium Enterprises (MSME) Clinic, assured that the new scheme is designed to support lending without core collaterals.
He said any genuine support for the sub-sector must be now when the survival of the economy largely depends on retail businesses, noting that to improve the dwindling fortune of the economy, a robust SME business environment has to be developed.
“This is why we introduced the Paris Klub SME (PKS) scheme to support lending without core collateral. We take pride in our hybrid solutions where borrowing customers gain access to more value added services including consulting, business tools and technology.
“What we have done is to bring up an innovative idea of how to finance SMEs without collateral. Once we identify the SMEs, we offer advisory services to them, we help them to structure their businesses and also with their cash flows”, he explained.
Sekibo noted further that Heritage Bank is currently developing a sponsored interest scheme for the educational sector where educational institutions can borrow at low rate, subsidized by the scheme manager.
“We are also discussing partnership programs with Venture Capital Firms to introduce debt-equity financing option”, he revealed.
According to him, one major reason why banks were not funding SMEs was assessed high risk inherent in the segment.
“A high perceived risk of lending to the largely unstructured SME sub-sector is a major issue. More efforts and resources are generally required to effectively monitor loans to SMEs which may result in eating into the bottom-line. In addition, Banks also have different risk appetite,” he said.
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