Naira Depreciation Has Reduced Value Of Tinubu’s Loan To MSMEs By 50%

The Senior Economist and Partner at SPM Professionals Ltd., Paul Alaje, has said that the value of the Federal Government’s N1m loan to 100,000 Micro, Small and Medium Enterprises (MSMEs) has been eroded by naira depreciation.

Alaje said this while responding to questions about the right funding that MSMEs would need in order to create employment and improve foreign exchange through small-scale exports.

The Economist said in an interview with THE WHISTLER that President Bola Tinubu and his economic team may need to rethink their plans to give loans to only 100,000 MSMEs out of over 40 million MSMEs in the country.

Tinubu had pledged to fund start-ups and MSMEs with N75bn out of which 100,000 MSMEs will be given loans of between N100,000 and N1m at a 9 per cent interest rate annually.

The loan is targeted at mitigating the impact of fuel subsidy removal.

But Alaje explained that for the scheme to produce the needed result, the loan has to be given to at least 10 million out of the 40 million MSMEs in the country.

According to him, part of the loan should be given as a grant.

He said, “We have about 40 million SMEs, and Mr. President is targeting 100,000 with N1m. The equation does not add up. We need at least 10 million SMEs to be supported by the President, and that should be only 25 per cent of the entire SMEs. It should not just be a blanket support. It should help the SMEs that are export-oriented, which will include those who want to export some resources or finished products. It could be those even selling shea butter because it is needed.

“This will help those who want to sell their agro-products out of Nigeria so much that we can earn the much-needed foreign exchange that is crumbling our nation and putting us to our knees because of our import dependence.”

Alaje also advocated that the amount be raised to at least N5m per SME, adding that naira devaluation has reduced the value of the currency.

He said, “Just before he was elected earlier in the year, the N1m, I can tell you that the worth of that money has reduced by half. This is because of the unification and floatation of exchange rates that he announced as a policy in his government.”