The Punch

Microlende­r seeks alternativ­e stock market for SMES

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Credit direct Limited has called on the government and regulators to work towards creating a secondary stock market for small and medium-sized enterprise­s for securitisa­tion.

Speaking to our correspond­ent at an event on Monday, the Managing director and Chief Executive Officer of Credit Direct, Akinwande Ademosu, said there was an urgent need to improve access to credit for Smes.

He said for a proper understand­ing of the issues they faced, their context had to be well understood.

He said, “the nation develops on the back of Smes, and in Nigeria, we have close to 50 million Smes. So, if these businesses employ three to five people each, we have covered our entire labour force. Nigeria cannot progress without developing that segment of the market.

“there are many parties involved in that environmen­t, of which the government is leading. the consciousn­ess of government to the importance of this sector means they have to take that lead and create an enabling environmen­t for them, especially on credit acquisitio­n, making sure they have the required backing and support in the securitisa­tion of their assets.

“they should also have a secondary market where they can trade, not just a stock market for the big companies alone, a second, third or fourth tier market that can cater to the need of the Smes,” he said.

Ademosu lamented the barriers limiting companies playing in the micro-lending space.

He said, “For organisati­ons like ours, what we need is support, especially in terms of cost of credit. there are funds available for us to channel into the SME market but the way these funds are structured creates an impediment to getting the funds themselves.

“For example, you create a fund and say before i can access it i must list treasury bills as security. Whereas i am not a deposit-taking organisati­on, i have to borrow money from the open market to fund my business. in the open market, the cost of that fund is higher than the interest generated by tbs; so, it is irrational for me to buy tbs for such credit.”

He added, “there is a need for improvemen­t in this process if we want to see developmen­t in the sector. Also, they need to allow for an interface between us and the commercial banks who have access to cheaper funds, so we can get funding from them too.

“We can only do bridging and small funding, so if these solutions are made available to us, we will lend more to Sme’s as it is in our best interest for the economy to grow.”

Credit direct Limited is a financial services company with operations in the unsecured micro-lending space in Nigeria.

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