NICA seeks greater support for MSMEs to drive economic growth

NICA seeks greater support for MSMEs to drive economic growth

The National Institute of Credit Administration (NICA) has expressed concern over inadequate support for Micro, Small, and Medium Enterprises (MSMEs) by multinational corporations, financial institutions, and other key stakeholders in the Nigerian economy.

The institute noted that despite their critical role in driving economic growth, job creation and national development, the MSMEs had continued to struggle with limited access to credit, unfavourable lending conditions, and insufficient financial backing from major players in the business and financial sectors.

Quoting recent economic reports, NICA said in a statement obtained on Tuesday that MSMEs contribute over 50% of Nigeria’s Gross Domestic Product (GDP) and account for more than 80% of employment opportunities.

The statement was signed by Registrar/Chief Executive Officer of the institute, Prof. Chris Onalo.

Despite the huge contribution of MSMEs to the nation’s economy, the institute said they had continued to face significant challenges, including unfair treatment by larger businesses, limited access to structured credit, delayed invoice payments, and insufficient patronage from banks, multinational corporations, and large enterprises.

It said, “These obstacles hinder their ability to scale and compete effectively in both local and international markets.

“Beyond credit access, financial institutions, multinational corporations, and other large conglomerates also fail to support MSMEs by patronising their businesses.

“Rather than engaging MSMEs for procurement and service contracts, they prefer dealing with large corporations or those owned by insiders in top management positions.

“This practice deprives MSMEs of essential business opportunities and stifles competition in the economy.

READ ALSO:

• Policewoman arrested for murder of husband, female friend
• One of 5 applying for students loan is female – NELFUND
• APC council chairmanship aspirant hacked to death in Lagos

NICA urged the Federal Government to put legislation in place to check this trend.

According to the institute, a thriving MSME sector depends not only on credit availability and accessibility but also on business opportunities. “When banks and multinationals overlook small businesses in their supply chains, they inadvertently contribute to the sector’s stagnation,” it stated.

It also said, “As Nigeria transitions towards a more credit-driven economy, the survival and expansion of MSMEs are increasingly dependent on the willingness of the government, financial institutions, and big corporate entities to create an enabling environment.

“Banks long-standing reluctance to offer flexible loan options and stringent collateral requirements and multinational corporations and other big business conglomerates’ general apathy toward integrating MSMEs into their value chains have significantly stifled small business growth potential in Nigeria.”

It therefore called for a policy framework in this regard.

It also decried the issue of delayed settlements of MSMEs’ invoices.

The practice of invoice settlement delays for 30, 60, or 90 had been found to be detrimental to the growth of small businesses, it stated.

It further stated, “MSMEs rely on prompt settlements of their invoices to maintain cash flow and operational stability. Delayed settlements can lead to liquidity challenges, making it difficult for small businesses to meet other business obligations – reinvest in operations or pay salaries.

“Large corporations often use this practice to manage their own cash flow while unintentionally creating financial strain on smaller suppliers.

“For MSMEs, these delayed settlements of business invoices can result in: Cash Flow Disruptions – Difficulty covering operational expenses, including salaries and inventory restocking; increased Borrowing Costs – Forced reliance on high-interest loans to bridge funding gaps; business instability – Risk of shutting down due to prolonged financial strain.”

The body, which noted that MSMEs fuel the banking sector through deposits and cash flows, payment and transactions, stressed the need for banks to, in turn, support MSMEs by offering reciprocal business opportunities and timely settlements.

READ ALSO:

• Tinubu: Fuel subsidy removal aimed at securing future for unborn generations
• Elon Musk confirms massive cyberattack on X traced to Ukraine
• Lagos couple arrested for kidnapping, blackmailing online vendor

To foster a more inclusive economic and financial ecosystem, NICA advised financial institutions, multinational corporations, and large conglomerates to adopt transparent and inclusive procurement policies that would provide MSMEs with equal opportunities to compete for contracts and services.

“Financial institutions, for instance, are advised to patronise the businesses of the MSMEs who bank with them, thus promoting business reciprocity,” it stated.

“As a sterling advocate for a credit economy, NICA is committed to intensifying its engagement with banks, multinationals, indigenous conglomerates, and policymakers to demand better credit access and reciprocal business opportunities for MSMEs,” it said.

It also sought enhancement of capacity building and mentorship programmes of MSMEs as part of banks and multinationals’ genuine and economically relevant corporate social responsibility (CSR) initiatives.

“This can be achieved by organising free mentorship and training programmes at least 2-3 times a year, focusing on areas such as management and leadership, corporate governance & entrepreneurship, bookkeeping & basic accounting,

NICA said equipping MSMEs with these essential skills, banks and large corporations would not only enhance the survival of small businesses but also strengthen and activate Nigeria’s overall economic landscape.

“A thriving MSME sector translates to a stronger

economy, increased jobs and wealth creation, and sustainable development for all,” it stated.

NICA seeks greater support for MSMEs to drive economic growth