Ecobank CEO advocates credit guarantee schemes to encourage lending to MSMEs

The Chief Executive Officer, Ecobank Transnational Incorporated, Mr Ade Ayeyemi has called on the Federal Government to introduce Credit Guarantee Schemes for Micro, Small and Medium Enterprises (MSMEs) as a measure to check risk.

Ayeyemi said this in a statement issued on Tuesday in Lagos.

According to him, MSMEs are a fundamental part of the economic fabric in Nigeria and the wider continent as they play a crucial role in furthering growth, innovation and prosperity.

He suggested that government shouldering some of the risk would encourage greater confidence among banks to lend to the sector.

Ayeyemi said that “presently’’, many banks would rather invest in treasury bills than give credits to individuals which may later result in non-performing loans.

“If the government were to take out part of the risk by guarantee, then I would become indifferent whether I put the money in a treasury bill or an MSME.”

The CEO, however, insisted that such a guarantee would only work if entrepreneurs repaid on time.

“If the MSMEs don’t pay, they are reducing the abilities of the banks to be able to fulfill their role in society in being able to lend,” he said.

On why new businesses collapsed fast, Ayeyemi said “part of that failure is not due to the person but also due to the circumstances in the environment’’.

“If you don’t have power, if there is no water and you need 5,000 dollars to set up a barbing salon today, if you are in Nigeria you spend more than half of that money on a generator, diesel and water.”

He suggested that a key component of the bank achieving its dual objectives of commercial viability and socio-economic development would be driven by combined activities.

The combined activities he said included strategic partners such as the International Finance Corporation (IFC), Bank of Industry (BOI) , Africa Development Bank (AfDB) and Afreximbank.