BoI, Others Commission Agency to Rate SMEs

• BoI, Others Commission Agency to Rate SMEs

The Bank of Industry, the Small and Medium Enterprises Development Agency of Nigeria and the Nigeria Export-Import Bank have hired the services of a rating agency to conduct ratings on the Micro, Small and Medium Enterprises operating in Nigeria.

Dun and Bradstreet Nigeria Limited, a rating agency, has been authorised by the listed agencies of government to conduct due diligence analysis on all existing SMEs in Nigeria.

Parties involved in the development signed a Memorandum of Understanding at an event that was chaired by the Minister of State for Trade and Investment, Aisha Abubakar, on Thursday in Abuja.

Nigeria currently has over 37 million SMEs, with most of them adjudged unviable due to challenges which include lack of access to finance and poor infrastructure, a development that make many of the firms susceptible to early demise.

Abubakar said access to finance was the major challenge confronting the country’s SMEs, but expressed confidence that with the coming of the rating agency, the growth of the SMEs in Nigeria would be boosted.

She said, “The proposed credit rating agency will complement this effort by providing an objective opinion on the potentialities and creditworthiness of the MSMEs. A rating agency typically should design scoring solutions for the SMEs. Financial institutions will use this rating to decide the kind of relationship they will develop with the SMEs in granting loans.”

The BOI’s Managing Director, Olukayode Pitan, said the decision by three agencies to engage a rating agency to conduct due diligence analysis on all the SMEs was very important.

He said with over 37 million SMEs in the country, contributing 48.9 per cent to the GDP, it remained a sad development that the sector was getting only about 0.29 per cent of the total loan granted by financial institutions.

Pitan explained that banks had problem in extending finances to the SME sector, adding that their reluctance to intervene in the industry was stemmed from various reasons, as the most significant factor was the high risk nature of the SMEs.