The National Institute of Credit Administration (NICA) has expressed serious concern about the high-interest-rate on loans being offered by banks to Small and Medium Enterprises (SMEs) in the country, describing it as undesirable for the growth of the enterprises and the nation’s economy.
The Registrar/Chief Executive Officer of the professional body, Prof Chris Onalo, in a statement canvassed the urgent need for the governments to make credit more accessible at lower interest rates and flexible repayment terms for the enterprises to enhance their profitability and sustainable growth.
While stressing that the key to fostering a robust environment for SMEs’ growth lies in the provision of business-friendly credit to the owners, Onalo maintained that doing so would encourage new and existing business owners to embark on entrepreneurial ventures and facilitate the expansion of established enterprises.
Specifically, the NICA boss strongly canvassed for single-digit interest rate loans with flexible repayment term as strategic step towards creating a business-friendly climate and empowering businesses to thrive and grow in the country.
He clarified: “It is difficult for businesses to break even with high-interest rate loans because the SMEs have other high operating costs which will make repayment a challenge to them.
“To be better competitors and be empowered to expand their trades, businesses should have access to single-digit interest rate loans with flexible repayment options. This is the ideal situation that will boost a business-friendly environment”, Onalo added.
He described SMEs as a vital source of livelihood for millions of ordinary Nigerians and that improving access to affordable financing remained not just a matter of business support but also a critical factor in enhancing the quality of life for many Nigerians.
Onalo stressed that access to cheaper loans would allow SMEs to save more, alleviate the burden of debt repayment, and secure more capital for expansion, ultimately contributing to the country’s Gross Domestic Product (GDP).
