KPMG survey aligns with CBN’s directive on lending more to SMEs

Tuesday, February 11, 2020

The economies of great nations thrive on the strength and capabilities of their Small and Medium Scale Enterprises (SMEs). In Asia, Europe and North America, SMEs play significant roles in their emergence as global economic powers.

Besides, SMEs are globally recognised as engines of socio-economic transformation. In Nigeria, they are at the heart of a push for economic prosperity.

Together with micro-scale ventures, these businesses contribute almost half of the national Gross Domestic Product (GDP), employ 76.5 per cent of the national workforce and account for 7.64 per cent of export receipts, a joint survey by Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) and the National Bureau of Statistics (NBS) in shows.

They also make up more than 90 per cent of the total businesses in Nigeria.

Micro, Small and Medium Enterprises, said to be about 41.5 million in Nigeria, can help re-distribute wealth, improve local manufacturing and diversify the economy. As such, the policies and institutions that support their growth are important variables for Nigeria’s economic ends.

One of such institutions is First City Monument Bank (FCMB), a leading financial services provider. The mid-tier lender in 2019 proved its mettle in the Nigerian banking industry, emerging the best bank in customer experience for SMEs.

The bank leapt to the first position in the SMEs category from a third-place ranking in the prior year. FCMB in 2018 also emerged the third most customer-focused in retail banking.

This is according to the 2019 Nigeria Banking Industry Customer Experience Survey (NBICES) report by KPMG, one of the big four global consulting firms.

According to the 2019 report, analysis of performance in the SME segment reveals dynamism in the latest ranking, with FCMB edging other banks to emerge top.

The 2019 research was conducted via face-to-face and online survey methodology, involving SME owners across Nigeria. It was anchored on six pillars of assessment and performance, namely personification, integrity, expectations, resolution, time and effort as well as empathy. “While the Nigerian banking landscape has constantly been faced with steep competition, the stakes have been raised even higher and performing well on customer experience is the new minimum standard,’’ KPMG said. “As the race for the customer intensifies, front-runners will be those who demonstrate an understanding of the customer’s specific circumstances to consistently deliver a personalised experience”, it added.

The latest positive affirmation received by FCMB is a demonstration that the various supports the bank offers to boost the performance of SMEs and its overall contributions to the growth of the nation’s economy are yielding the desired results and appreciated by the market. FCMB is known for its bespoke products and excellent service offerings cutting across retail, SMEs, transaction, commercial and corporate.

The leap in the rating of FCMB as a leading lender in Customer Experience for SMEs is a proof that the bank is on the right path towards achieving its goal of attaining the highest levels of customer advocacy in the industry and a major contributor to economic development. The bank had, on several occasions, restated its commitment to consistently deliver exceptional service and offering the right propositions to help SMEs and other customer segments fulfil their individual and business aspirations.

For instance, the bank recently organised a training themed, ‘’Supporting Women Businesses to Scale Up in 2020’’, a free and comprehensive capacity building and empowerment programme for women entrepreneurs in Ogun State.

The programme aimed at enhancing the productivity and profitability of Small and Medium Scale Enterprises (SMEs) through funding, capacity building, advisory and other forms of support, held February 5, 2020, in partnership with the Office of the First Lady of the State, Mrs. Bamidele Abiodun.

The bank said it would continue to assist SMEs to overcome the challenges they usually face, especially at the take-off stage, because it wants to be part of their success story.

FCMB Managing Director Adam Nuru said FCMB has built a strong base in the SME segment by consistently championing and executing several cutting-edge solutions that have tremendously impacted on businesses nationwide under the following pillars of support; access to capital, capacity building, advisory services, networking opportunity and technology.

He said the lender is one of the top participating banks in the various intervention funds of the Central Bank of Nigeria (CBN) and Development Finance Institutions (DFIs). “FCMB has been commended by the CBN, Bank of Industry, Development Bank of Nigeria, among others, for its strong support to SMEs,” he said.

The lender also partners local and international DFIs to provide various forms of funding, guarantees, grants and capacity building programmes to entrepreneurs. Also, FCMB offers free banking transactions for three months to new to Bank SME customers. It also has in its bouquet tailored products to suit the needs of SMEs customers, such as free accounting applications, Payroll solution and so on.

FCMB has equally automated its lending process for SMEs by adopting digital banking solutions to penetrate and deepen its intervention in the segment through its Quickloans platform. Since the launch of the platform in July 2019, over N10billion unsecured loans have been disbursed to SME customers within three to twenty-four hours of application through the Quickloans platform.

For women entrepreneurs, FCMB’s SheVentures initiative, launched in March 2019 to offer enhanced support to existing and start-up women-owned SMEs through access to finance, training and mentoring, has continued to encourage entrepreneurship, while also turning around the fortunes of existing businesses. Apart from other benefits, it comes with a zero-interest rate for an initial period of three months for beneficiaries. Also, over 2000 women entrepreneurs are being mentored by the Bank through the SheVentures initiative.

Beyond financial support, FCMB has trained over 10,000 SMEs, while also championing and executing several value-added capacity building programmes that have fast-tracked the growth of businesses, thereby upscaling their contributions to the development of the country. The lender organises a comprehensive programme, tagged, ‘’Business Enterprises and Sustainability Training (BEST)’’, SME Clinics and Masterclass for business owners nationwide to equip them with management skills and ensure effective networking.

FCMB has ensured the development of emerging markets, such as renewable energy, agribusiness and creative industry. The Bank hosts several workshops and exhibitions for these sectors. For instance, it organised a workshop on Climate Finance Awareness, in partnership with the International Finance Corporation (IFC), under the theme, ‘’EnergyEfficiency and Solar Energy Solutions for Your Business”. This was a follow-up to the one held in August 2018 on Sustainable Energy Finance (SEFi). There was also a seminar on tax matters, in collaboration with the Federal Inland Revenue Service, for SMEs in June.

In the same vein, FCMB in November 2019 hosted a workshop on Energy-Agric Nexus for Rural Economic Development, under the theme, “Stimulating the Agricultural Sector through Off-Grid Energy Development”, in Abuja. It was in partnership with the Rural Electrification Agency (REA), The European Union, Deutsche Gesellschaft fur Internationale Zusammenarbeit (GIZ), Nigerian Energy Support Programme (NESP), Heinrich Boll Stiftung (HBS) Foundation and Power for All. The workshop provided a rare opportunity for operators in agribusiness and the power sector to engage in constructive and interactive sessions with industry experts and decision-makers on harnessing and deploying alternative, renewable, clean and affordable sources of energy, particularly off-grid ones, to stimulate agribusiness.

First City Monument Bank (FCMB) Limited is a member of FCMB Group Plc, which is one of the leading financial services institutions in Nigeria with subsidiaries that are market leaders in their respective segments.

Having transformed into a retail banking and wealth management-led group, FCMB expects to continue to distinguish itself through innovation and the delivery of exceptional services.

Central Bank of Nigeria (CBN) Governor Godwin Emefiele said the apex bank set up the N220 billion Micro Small and Medium Enterprises (MSMEs) fund as part of its developmental role and mandate of promoting a sound financial system.

This was in recognition of the significant contributions of the MSMEs sub-sector to the economy. It said the sub-sector is characterised by a huge financing gap which hinders the development of MSMEs.

“To fulfil the provisions of Section 4.2 (iv) of the policy, which stipulates that women’s access to financial services to increase by at least 15 per cent annually to eliminate gender disparity, 60 per cent of the Fund has been earmarked for providing financial services to women.

“This informed the decision of the Central Bank of Nigeria to establish the Micro, Small and Medium Enterprises Development Fund (MSMEDF). The Fund prescribes 50:50 ratio for on-lending to micro-enterprises and SMEs by Participating Financial Institutions (PFIs),” it said.

It explained that two per cent of the wholesale component of the Fund shall go to economically active persons living with disabilities (PLWD) and 10 per cent provided for start-up businesses.

“The broad objective of the fund is to channel low-interest funds to the MSME sub-sector of the economy through Participating Financial Institutions (PFIs) to enhance access by MSMEs to financial services, increase productivity and output of microenterprises, create jobs and engender inclusive growth,” it said.

The NBS said SMEs play a significant role as the engine for economic transformation and industrialisation for both developed and developing countries.

Such roles, he said, include improved income re-distribution (low-level capital required), job creation and skills development (particularly for youth, women, elderly), adoption of technology & innovation (competitiveness), industrial diversification, stimulate the local economy (demand down the value chain).

NBS also listed challenges facing SMEs as vulnerable to economic shocks, stable and supportive policy environment, excessive regulation, complex & cumbersome tax process, skills acquisition for youth population among others.

It said the SMEDAN/NBS survey was conducted in all 36 states of the federation, including the Federal Capital Territory (FCT), Abuja. Both urban and rural enumeration areas were covered.

“Poor access to finance was highlighted as a major challenge for MSMEs. Also in the list are poor power supply, inadequate water supply, taxation and unfavourable government policies among others,” it said.

According to NBS, 22,200 households, 600 households with enterprises interviewed per state, 15 households selected per enumeration area in getting figures for the micro-enterprises. For the Small and Micro Enterprises (SMEs), 4,000 operators were visited across all states, including FCT.

He said that of the 41.5 million MSMEs nationwide, Micro constituted 41,469,947 (99.8 per cent) , Small: 71,288 (0.17 per cent) and Medium: 1,793 (0.004 per cent).

Continuing, it said: “Composition of sectors is different for each business type classification, primarily due to staff requirements of more formal establishments. For instance, Education & Construction are low for small business but top 5 for medium-scale enterprises. Education, Manufacturing, and Wholesale/Retail Trade make up 68 per cent of small enterprises. Manufacturing, Wholesale/Retail Trade, and Human Health & Social Works make up 68 per cent of medium enterprises”.

Other key observations in the report are that wholesale/retail trade, agriculture, and other services activities make up 76.3 per cent of Microenterprises.

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