Financial analysts and economic experts have canvassed credit guarantee as additional support to alleviate the financial constraints currently being faced by MSMEs as the economic effects of COVID-19 pandemic rages.
The experts disclosed this at the just concluded DBN Webinar Series with the theme: “Risk Sharing: A Key Driver for Increased Financial Access and Economic Development for MSMEs”, a virtual knowledge sharing series held via zoom.
The Group Head, Emerging Business of Access Bank, Mrs. Ayodele Olojode, explained that MSMEs did not have regular and sustained access to finance because of limitations like high interest rates, lack of tangible collateral and economic conditions.
She emphasised that, “Risk sharing facilities will help increase access to finance which helps MSMEs grow, increases employment and output in the economy.”
She disclosed that Credit Guarantee Schemes (CGS) were popular policy instruments that were created to help alleviate the credit constraints faced by MSMEs.
In Nigeria, however, she said there existed some challenges with risk sharing in the local market as most MSMEs did not fully grasp the concepts of risk-sharing and credit guarantee.
She further explained that, “The credit guarantee industry in Nigeria is still at a nascent stage, where the volume of guarantees and the size of the industry contributions to SMEs remain low compared to peers in other economies.
“Credit guarantee is the future because it will compensate for insufficient collateral, provide regulatory capital relief for banks, growth for MSMEs, increased economic GDP and job creation.”
On economic growth challenges and the impact of COVID-19 in Nigeria, Senior Financial Sector Specialist, World Bank, Mr. Ahmed Rostom, shared data from surveys carried out by the World Bank between April and March 2020.
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