SMEs: First Bank Offers Single Digit Lending Rate

The Small and Medium Enterprises (SMEs) are believed to be the engine room for the development of any economy because they form the bulk of business activities in a growing economy. However, lack of adequate credit for SMEs, traceable to high lending rate or the reluctance of banks to extend credit to them, has been identified as the major challenge hindering growth in the sector.

To mitigate this burden on SMES, in July, respite came in sight for Nigerian small businesses following the decision of First Bank of Nigeria Plc to extend single digit loans to entrepreneurs, in partnership with the Nigeria Association of Small Scale Industrialists (NASSI).

The Bank signed a Memorandum of Understanding (MoU) with NASSI to ensure hitch-free implementation of the initiative that is geared towards promoting the growth and development of the sector. The bank also created a special department, the Emerging Corporate Unit, to ensure the smooth run of the scheme.

Strategic Focus On Financial Inclusion
First Bank’s Group Managing Director/Chief Executive Officer, Bisi Onasanya, said the initiative is in line with the Bank’s strategic focus on financial inclusion. Mr. Onasanya said the scheme would address the challenges of credit delivery to the unbanked markets’ segments through mobilised funds that will avail credit facilities to registered NASSI members at concessionary rate.

He said, “The loans are only available to members of NASSI nationwide, to facilitate the success of their businesses and eventual growth into large corporate organisations.” Mr. Onasanya further said in addition to warehousing and disbursing mobilised deposits, the Bank would support the group through business advisory services, capacity building and development of relevant IT infrastructure, as well as the issuance of bio-metric identity card to all members.

Identifying access to finance as the biggest challenge facing SMEs, First Bank’s chief urged operators of small businesses under the aegis of NASSI to take advantage of the facilities and ensure compliance with repayment terms to ensure the success of the scheme and collaboration between the Bank and NASSI. “Every default in repayment is a disincentive to lending to another person, that is why all borrowers must ensure that they repay the loans promptly,” he added.

The NASSI President, Chuku Wachukwu, said the organisation was grateful to FirstBank for providing a platform for its members to access loans at a single digit rate. “This indicates the bank’s commitment to the nation’s economic development and I want to assure all stake-holders that NASSI members will take full advantage of this platform while the organisation’s leadership will ensure that there will be no defaulters in the scheme,” Mr. Wachukwu said.