Personal Savings and Family Sources to be Responsible for 83.07% of MSMEs Capital in 2021

MSMEsToday findings show that about 83.07% of the capital needed by Micro, Small and Medium Enterprises (MSME) in 2021 will come from personal saving and Family sources as deduced from the National Survey on MSMEs conducted by National Bureau of Statistics in 2013 and 2017. Though this has been the trend over the years, the trend is expected to continue in 2021 despite various government interventions.

The share of personal saving is projected to stand at 55.55% a downward trend when compared with its share of 61.24% in 2017 which represents four years ago. Family sources share is expected to increase from23.62% in 2017 to 27.52% in 2021.

Looking at the growth in the number of MSMEs in 2021, Micro Enterprises (ME) with start-up capital between the range of N50, 000 to N100, 000 are still expected to dominate the MSMEs in 2021. Findings show that MEs will accounts for 98% of the total MSMEs during the year under review and many of the MEs can secure needed capital through personal saving with more than 15million of MSMEs owning bank accounts.

Furthermore, the account of CBN intervention fund for the months of April and May, 2020 revealed that about 58,039 beneficiaries has received loans through CBN partner agencies. This figure represents 0.13% of the total MSMEs beneficiaries in 2017, which is not up to 1%. Experts are of the opinion that not every MSME will have access to various government interventions but many will still resort into personal saving and family sources.

Finding show further that Cooperative and Esusu contributions are expected to be responsible for 9.37% of the capital needed by MSMEs in 2021. Next in magnitude to Cooperative and Esusu are loans from financial institutions as the case may be which is expected to be responsible for 8.90% of the capital required by MSMEs.

In a bid to ensure that businesses across all sectors of the country’s economy sustain their operations in the aftermath of the Covid-19 pandemic, the Central Bank of Nigeria (CBN) introduced several loan opportunities and fund interventions such as AGSMEIS Loan For SME’S And Agricultural Businesses Without Collateral, Anchor Borrowers Programme (ABP) Intervention For Agriculture, Accelerated Agricultural Development Scheme (AADS Loan), MSMEDF Loan – Micro, Small and Medium Enterprises Development Fund, Creative Industry Financing Initiative (CIFI Loan) and CBN Healthcare Research And Development Grants.

The number of MSMEs depending on loan as a source of capital for their operation in 2021 is expected to grow by 104.27% from 2.7 million MSMEs in 2017 to 5.7 million MSMEs in 2021. This represents the highest growth rate compared to other sources of capital. Family sources is projected to increase by 41.95%, Cooperative and Esusu to experience a growth rate of about 37.74% while personal saving is to grow by 10.54%. On the other hand grant and other means of capital for MSMEs in 2021 are to drop by 52.52 and 47.64% respectively.  

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