Banking recapitalisation will boost economic growth – FCMB MD

The Chief Executive Officer of First City Monument Bank, Yemisi Edun, has called on financial institutions to increase funding for Small and Medium Enterprises, and SMEs.

She made the call at a panel session of the annual Banking and Finance Conference organised by the Chartered Institute of Bankers of Nigeria on Wednesday in Abuja.

The panel discussion was titled, “Repositioning the financial system for economic growth”.

Edun noted that access to capital for SMEs remained low to drive economic growth, adding that small businesses, which constitute a major employer of labour, must be considered as an utmost necessity to facilitate economic growth and prosperity.

She stated that the ongoing recapitalisation exercise would unlock improved credit facilities for enterprises at a reduced rate.

According to the FCMB CEO, developmental funding is essential for aligning financial systems with economic objectives and this must be implemented with adequate access to capital.

She mentioned that only 6 per cent of those small businesses had access to capital funding and decisive actions must be taken to improve the situation.

She said, “Developmental funding is crucial when we are talking about positioning the financial system to drive economic growth. We must be able to look at the impact of this general system. We cannot dissociate capital funding from this and when we are talking of capital, we look at the financial system.

“The CBN has graciously directed a raise, and it is already working out.  But on the other side for companies not in the financial sector, how do they assess and build capital? Capital for them will not only be about equity, but they will be looking at debt capital, development capital and other funding, which would also include joint ventures.

“Access to capital by personal individuals or SMEs is still very constrained, and we need to get that right to see a continuation of economic development that we are talking about in the economy. Statistics currently show that about 6 per cent of consumers and SMEs have access to capital.”

The FCMB CEO proposed the possibility of joint ventures to help businesses raise funds, calling for more partnerships to facilitate more interventions from the Bank of Industry, Bank of Infrastructure, and Bank of Agriculture as part of efforts to fund the SMEs.

Edun added, “Access to capital for these businesses has a lot of known impediments, such as the interest rate hikes. Another could be maybe collateral requirements from banks.  So we have to look at, how we push in some of this impact.

“The capitalisation we are raising will make funding a little bit cheaper. Because there will be a blend of funds before we lend to customers. But majorly is around developmental funding as well the intervention funds. We cannot grow the economy if we are not growing or seeing what the likes of the Bank of Industry, Bank of Infrastructure, and Bank of Agriculture do. They also have to contribute.’’

According to the FCMB boss, intervention in this area is very critical for the SMEs to be able to feel the impact of the financial system.

“If we can re-channel this and ensure that these businesses have good funding, then they will grow. Another area that we then also need to be looking at, because it is just not facts that will supply this sort of access to funding for SMEs.

“There has to be, maybe joint ventures, venture funding that can be raised, you know, for SMEs to tap into, so that the continuous development of the financial institution can happen,” she stated.

 Stakeholders at the 2024 Green Finance Conference in March called for increased funding for SMEs, as well as more effective strategies for addressing climate change challenges.