Insecurity: A Key Obstacle to Bank Financing for Micro, Small and Medium Enterprises

Insecurity has been identified as a significant barrier to Micro, Small, and Medium Enterprises (MSMEs) accessing bank financing.

Professor Chris Onalo, Registrar and Chief Executive Officer of the National Institute of Credit Administration (NICA), highlighted that historically, the lack of security has hindered MSMEs’ ability to obtain bank loans.

He added that President Bola Tinubu is making concerted efforts to ensure economic stability.
MSMEs, including start-ups and other small business initiatives, typically operate with limited budgets and resources.

“Lack of security has historically hindered MSMEs’ access to bank financing,” he said.

Onalo noted that the National Credit Guarantee Company (NCGC) aims to address the long-standing issue of collateral requirements, adding that the Tinubu administration’s ongoing loan schemes are designed to build resilience against economic shocks.

He emphasized that the consumer credit initiative led by the Nigerian Consumer Credit Corporation (CREDICORP) is expected to boost the economy and improve living standards in Nigeria.

According to him, the ‘cash and carry’ business model hinders economic growth, whereas the ‘buy now, pay later’ approach creates opportunities for small businesses to thrive and expand.

He explained that Tinubu’s credit policy tackles key challenges faced by MSMEs, and that establishing a guarantee system helps absorb bankable risks and enhances financial inclusion.

“Tinubu is quietly and carefully laying a cornerstone for economic stability. A credit economy is essential for sustainable growth and development,” Onalo stated.

He asserted that no developed economy thrives without credit, emphasizing the importance of access to credit for resilience and long-term economic sustainability.

source: nairametrics.com

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