The Lagos Chamber of Commerce and Industry (LCCI) has described the size of Nigeria’s domestic credit to the private sector in the country as largely insufficient and one of the lowest in the world.
The president of the association, Mrs Toki Mabogunje made the declaration on Nigeria’s domestic credit to the private sector at a virtual web conference, organized by the Chamber in collaboration with Jersey Finance, a Commonwealth Advisory and Investment Council, on Tuesday, 28th July 2020.
Mabogunje argued that with total gross credit to the nation’s private sector put at N18.90 trillion as at end of June 2020, representing about 13% of the Gross Domestic Product (GDP), it was glaring that such credit size would create a huge funding gap, and some liquidity challenge for businesses to meet working capital requirements and finance new projects.
She added that the advent of the COVID-19 pandemic had further worsened the risks and uncertainties surrounding capital and finance, being experienced by businesses before the public health crisis.
Mabogunje explained that the decision to organise the conference stemmed from the importance of access to capital and finance to the development of the nation’s economy, given a large number of businesses in the country and the important role such businesses play in facilitating economic growth and development.
“Prior to the COVID-19 pandemic, businesses were increasingly finding it difficult to access finance through the domestic financial system, given the high borrowing costs associated with a credit facility in the conventional banking system.
"Moreover, the COVID-19 pandemic has elevated the risks and uncertainties around capital and finance generally in view of deteriorating business and economic outlook,” she added.
The LCCI boss, therefore, expressed the hope that the conference would enable participants to explore other alternative funding solutions, available on global, as well as local space.
While commending the Central Bank of Nigeria (CBN) on its efforts at expanding the frontiers of finance for businesses, through its different policy directions, regarding the MSMEs, Mabogunje, however, expressed the belief that the time had come for stakeholders to deepen the landscape of capital and finance in Nigeria.
She argued that to be able to successfully unlock access to international capital and finance for the nation’s businesses, it had become imperative to holistically address issues, constituting impediments, over the years so as to align the expectations of investors with the priorities of business owners.