First Bank of Nigeria has signed a Memorandum of Understanding (MoU) with the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), with the aim of boosting small businesses in the country.

Speaking at the signing ceremony, held at the bank’s head office, in Lagos, the Executive Director, Risk and Chief Risk Officer, First Bank, Segun Alebiosu stated that  the collaboration has become necessary to develop the nation’s SMEs sector and enhance the national  economy.

He noted that the partnership is needed to engender trust and confidence of the nation’s financial institutions to play more  in that sector, and help small businesses develop.

Alebiosu identified huge number of defaults, lack of trust and  capital, as some of the factors hindering the growth of SMEs in the country.

He however noted that with the collaboration, and the intervention of SMEDAN in making the sector more investment-friendly, the bank would be able to play its financial intermediary role, and assist in growing the  sector.

“I think one of the challenges hindering us, as a bank, from participating fully in the nation’s SMEs sector is the general lack of trust,  and high volume of default. That is why we will like to appeal to SMEDAN to find a way of cleaning  up the sector, and ensure that it registers only businesses with integrity.

“We believe doing this will give us the confidence to fully support the sector,, and enable it realise its potential as the engine room of the nation’s economy,” he stated.

In his response, the Director General, SMEDAN, Dr. Olawale Fasanya, expressed the  agency’s delight at the partnership, noting that the intention of the MoU is to enable the agency leverage the vast network of the bank to develop the SMEs sector.

He stated that one of the priorities of the agency is to educate operators of small businesses on the importance of book-keeping, while also drumming home to them  the key benefits of loan facilities and the need for them to be promptly paid back; since many of them still see such facilities as dividends of democracy.

“We are trying our best to let the SMEs know that there is no free money anywhere. When they know that government is involved, they kust see it as dividends of democracy. So we are trying to discourage government lending directly to SMEs.

He explained that the signing of the MoU will enable the agency fund creditworthy SMEs, through the bank, adding that the agency is also in talks with the federal government on the need for a credit guarantee scheme, to enable it have a fall-back option in case of a default by any SME.