By Levi Anyikwa, Southeast Regional Coordinator of SMEDAN
SOUTHEAST STAKEHOLDERS ENDORSE ESTABLISHMENT OF SME RATING AGENCY
Organized Private Sector from the Southeast geopolitical zone on Monday endorsed the establishment of the proposed Small and Medium Enterprises Rating Agency of Nigeria (SMERAN). The framework for the rating agency presented to stakeholders provides that SMERAN shall be a full service rating and compliance consulting agency registered with the Corporate Affairs Commission (CAC) and Securities and Exchange Commission (SEC) and supervised by the Central Bank of Nigeria (CBN).
SMERAN is programmed to provide, among others, credit rating service which is an evaluation of the credit risk of prospective debtor-enterprises, predicting their ability or inability to pay back debts and implicitly forecasting the likelihood of the debtor to default or otherwise. SMERAN is also expected to provide bond rating services which entail evaluation of bonds to determine their credit quality.
Collaborating institutions include the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), Bank of Industry (BoI), Nigeria Export-Import Bank (NEXIM) and the Organized Private Sector made up of Nigerian Association of Small Scale Industrialists (NASSI), National Association of Small and Medium Enterprises (NASME), National Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Manufactures Association of Nigeria (MAN), Nigeria Association of Women Entrepreneurs (NAWE) and African Women Entrepreneurship Project (AWEP), among others. Foreign technical partners are: SME Rating Agency of India (SMERA) and Dun & Bradstreet – world’s leading source of commercial information possessing one of the largest global commercial data base.
Speaking during the One-Day Stakeholders’ Sensitization and Awareness Creation for the establishment of the rating agency held in Enugu, representatives of Enugu Chamber of Commerce, Industry, Mines and Agriculture (ECCIMA), Vocational and Entrepreneurship Development Association of Nigeria (VEDAN), NASME, AWEP hailed the proposal and unanimously agreed that SMERAN would facilitate more access to credit by MSMEs in the Southeast.
They, however, requested for level-playing field for MSMEs in the six geopolitical zones in the implementation of SMERAN programmes. Endorsing the establishment of the rating agency, the Organized Private Sector (OPS) from the Southeast insisted that the proposed rating agency should be a “watch dog” for lenders and borrowers alike.
Earlier in his keynote address to the stakeholders, the Director-General of the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), Dr. Dikko Umaru Radda, stressed that the establishment of SMERAN was intended to reduce the turnaround time in MSMEs’ access to funds and other critical resources. He lamented that in spite of the pivotal role of the MSMEs sector in the nation’s economic development, the sector had continued to be plagued by challenges such as: lack of management skills; lack of access to affordable finance; lack of access to local, regional and global markets; lack of corporate governance; lack of access to appropriate technology; low production capacity; lack of linkages to large enterprises and lack of infrastructure.
Justifying the establishment of the rating agency, the Director-General who was represented by the Southeast Regional Coordinator of SMEDAN, Mr. Levi Anyikwa, noted that a majority of the MSMEs were operating as informal entities and did not have the capacity to maintain minimum corporate governance standards and as a result, most fund providers were not confident extending loans to enterprises whose track records are neither known to them nor easily verifiable. “Such businesses are therefore perceived to have a higher probability of credit default and actually default in most cases. This contributes largely to the inability of MSMEs to access affordable credit”, he added.