The National Institute of Credit Administration (NICA) says the availability of loans with low interest rates and flexible repayment terms will improve the profitability of Small and Medium scale Enterprises.
According to the News gathered, Prof. Chris Onalo, the Chief Executive Officer of NICA added that a business-friendly loan would encourage intending and existing entrepreneurs to borrow and start new businesses and expand existing ones.
He stated, “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.”
He asked for support that would make businesses to grow better in the country, because they provide livelihood to a large proportion of the entire populace.
The National Bureau of Statistics labour (NBS) charts shows that a majority of Nigerians were self-employed.
“Majority of Nigerians are self-employed while a much smaller proportion holds wage jobs. In Q4 (2022) and Q1 (2023), 73.1 per cent and 75.4 per cent of employed Nigerians respectively worked in their own business or farming activity for their primary job,” NBS said in the report.
Onalo added that, businesses in advanced countries are well positioned to compete better in their countries, and even in other countries where they expanded to because of access to low-interest rate loans which are usually lower single digits.
He claimed that access to cheap loans would provide more finance to SMEs because they would have more money to save, adding that it would reduce their debt repayment burden, and increase capital for expansion as they would pay less over the life span of the loan.
NICA said, entrepreneurs would avoid patronising loan sharks, and choose from a variety of loan durations that suits their repayment plans to fit their budget and financial goals With access to flexible repayment terms.
