MICROCAPITAL STORY: Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) and Microfinance Banks Association of Nigeria Partner Together in Nigeria’s Microfinance Sector

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Wednesday, August 1. 2007

The Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), a government agency administering assistance programs for small businesses, has made an announcement with the Microfinance Banks Association of Nigeria, an organization of Nigerian microfinance institutions (MFIs), that the two bodies will develop a team strategy for executing microfinance business in Nigeria. While the MFIs within the Microfinance Banks Association will continue to provide the capital necessary for micro loans to clientele, SMEDAN will assist by providing instructional services to MFIs’ borrowers. SMEDAN will educate microfinance clients on entrepreneurial skills as well as provide vocational training within clients’ respective industries.

At the announcement, Modupe Adelaja, Director General for SMEDAN, requested that the cooperating MFIs would consider reserving a percentage of their capital funds for what she termed “business development services.” An example of such services within Nigeria is the Business Development Services (BDS) Fund, established in August 2006 by the World Bank Group. The BDS Fund provides grants for micro, small, and medium enterprises (MSMEs) for the specific purpose of enterprise expansion—increasing production capacity and employment. Ms. Adelaja suggests that any funds reserved for business development services would be provided as a specialized loan to MSMEs.

Established in 2003 according to the Nigerian SMEDAN Act (or the SMIDA Act), a Nigerian economic reform, SMEDAN provides the entirety of governmental assistance to MSMEs in Nigeria. The primary document listing the goals of SMEDAN is the New Economic Empowerment and Development Strategy (NEEDS), the Government of Nigeria’s poverty strategy drafted at the request of the International Finance Corporation (IFC) of the World Bank Group. SMEDAN’s website is currently inactive, thus further information is not available.

No further information is available regarding the Microfinance Banks Association of Nigeria. Nigeria currently has fewer than 1 million microfinance borrowers.

By Quentin Ruiz-Esparza, Research Associate

BusinessDay Online: “SMEDAN, Micro-finance Banks Strike Partnership.”

The Donor Committee for Enterprise Development: “Project Phases – Project Design.”

MSME Nigeria Project: “Business Development Services.”

Guaranty Trust Bank: “Business Links.”

World Bank: “The World Bank.”

Commonwealth of Nations: “SME Development Agency of Nigeria.”

Centre for Democracy and Development: “Projects.”

International Finance Corporation: “IFC Home.”

Microfinance Gateway: “New Vista Opens in Banking for the Poor.” By Bola Fajemirokun

Posted by microcapital in Asia at 03:34

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