Dr Kabir Dodo has lampooned Nigerian Banks for demanding collaterals from Micro, Small, Medium, Enterprises, (MSMEs), in order to extend credit facilities to them.
Dodo, who preferred to be identified as a businessman, was visibly unhappy with the situation, as his question on the subject of collateral at the event was stood down on the basis of not being part of the issue in discuss.
New National Star Correspondent cornered him on the sidelines of the event, 2025 Development Bank of Nigeria (DBN) Annual Lecture, with the theme: ‘Positioning Nigerian MSMEs for growth in a dynamic policy environment’ held on Thursday, September 25, at Transcorp Hotel, Abuja, to air his view on the subject.
He argued that if MSMEs are the economic backbone of the nation and future, as being touted by the government and their financial institutions, including commercial, micro-finance, and merchant banks, it is then contradictory to ask the small business entrepreneurs to avail buildings, stocks, guarantees and bonds that they cannot afford before extending loans to them.
He opined that banks should see MSMEs as a mutual beneficial relationship where in the end, bank will share in the profit of the businessman.
“Every business is about profit and profit sharing. I think people don’t understand the difference between profit and profit sharing. And they always talk about resilience in business. No, no, no. I believe in compassion and the passion in any kind of business you want to do.
“But my only problem here is Nigerian banks. I believe this is Development Bank, (making reference to the DBN, organisers of the event),
so it’s not a commercial bank, as far as I’m concerned, it’s a development bank. That’s why I really want to know why is it always when you go to the bank for a loan, they won’t give you a loan unless you put down your collateral, which is very unusual in modern businesses.
“The most powerful nation in the world is in America. You go to American banks, get a loan, and they won’t ask for your collateral. And they even help you if you fail. When you fail, then the bank will come in and tell you, okay, this is how you are going to go about this business. They will give you more money. But in Nigerian banks, I don’t know why they always want to have collateral before giving you the money.”
He posited that what the banks need is to evaluate their business and be convinced that it is worth while and support them with requisite funding and monitor closely the utilisation of the funds and operations. He gave instance of farmers in the rural areas who do not have collateral but can cultivate enough for exports if supported with funds.
He said: “I still insist that the Nigerian banks should do away with collateral if it is a business. The only thing I want to emphasise and I want to advise on is monitoring by the unit in any kind of bank. They will monitor the business. They will be seeing how you are going on with that business.
“There are so many farmers there, so many farmers. Somebody has one hectare, two, four, five hectares of land cultivated onions, sweet potatoes. They have money and they are not known. They don’t even have account number. I hope you understand. And these people are the same people that can export their products outside.
“All they need is more awareness and how they go about their business and they need loan. Sometimes if they want to increase their production, they need loan. So this kind of people, you will ask them to bring collateral? No, go to the farm and see the farm and see the land. Give them loan and monitor them.”
Dodo stated that in giving loans without collateral, the bank should ask the entrepreneur to open account and draw up a repayment schedule that will run weekly, monthly or quarterly for a seamless transaction.
Meanwhile, the Development Bank of Nigeria (DBN) said it had disbursed about N1.1 trillion to Micro, Small, and Medium Enterprises (MSMEs) across the country.
The Managing Director of the bank, Dr. Tony Okpanachi, made the disclosure at the sixth annual lecture of the organisation in Abuja.
He said: “At DBN, we are proud to be playing our part. By the end of December 2024, DBN had disbursed a cumulative sum of over N1.1 trillion to MSMEs across the country, working through 79 Participating Financial Institutions to on-lend to over 700,000 businesses.”
“These figures represent more than just numbers; they reflect jobs sustained, dreams realised, and enterprises positioned for growth.”
Okpanachi noted that MSMEs have in recent years been challenged by historic policy shifts and limited access to finance, which hampered their growth and sustainability. He, however, described the current period as a “new dawn and a rekindled hope,” citing several government initiatives, including the inauguration of the National Council on MSMEs, which is tasked with policy formulation, fostering public-private partnerships, and promoting inter-agency collaboration.
“We at DBN align strongly with this agenda and are doing a lot to ensure that MSMEs continue to prosper and flourish,” he added.
He noted that the bank is not only a financial provider but convener of ideas and builder of capacity, describing the annual lecture as a platform for policymakers, entrepreneurs, financiers, and thought leaders to explore strategies for unlocking the potentials of Nigerian MSMEs.