Financial Illiteracy, Bane of Nigeria’s MSMEs — Minister
Minister of State for Industry, Trade and Investment, Aisha Abubakar, has said that financial illiteracy remains the bane of Micro, Small and Medium Enterprises (MSMEs) in Nigeria. Aisha Abubakar stated this at the FATE Foundation 4th Policy Dialogue Series on Entrepreneurship, in Abuja, with the theme, “Building Sustainable Businesses: The Case for Deepening Financial Literacy”.
She noted that the Federal Government has initiated financial literacy strategies to help tackle the problem. The Minister stated: “Nigeria is blessed with a strong entrepreneurial culture and can rightly be referred to as one of Africa’s leading entrepreneurship hubs. Despite the inherent benefits in this large pool of MSMEs, their viability and growth are continually threatened by a number of factors that have a strong correlation with capacity limitation in general and poor financial literacy in particular.
“Government’s efforts at unlocking access for MSMEs through strategic institutions such as the Central Bank of Nigeria (CBN), Bank of Industry (BoI) and other development Finance Institutions have not achieved the desired impact as the MSMEs have, according to development experts, consistently failed to provide financial information that is required to evaluate their investment requests.”
She said that financial literacy was now globally recognised as a major life skill and a factor of economic and financial stability and development of MSMEs for performance. “Financial literacy encompasses knowledge cognitive skill and attitudes to financial matters. Financially literate entrepreneurs of MSMEs are more likely to better manage their businesses than those that are not financially literate,” she stated.
According to her, the Federal Government will continue to support financial literacy initiatives, including recent efforts to inculcate financial literacy education into syllabi in Nigeria’s educational institutions at all levels. “The Ministry believes that with a progressive policy framework, long-term growth and sustainability of MSMEs can be achieved. The Ministry will ensure that rapid improvement in financial literacy is continually accorded very high priority in the scheme of things as it’s a sine qua none for transforming Nigeria into a global competitive industrialized country.”
She said that the country must acknowledge the important role financial literacy played in building sustainable businesses in Nigeria. In her remarks, Mrs Adenike Adeyemi, Executive Director, Fate Foundation, said financial literacy enables entrepreneurs to plan, manage financial risk, cash flow, identify and seek appropriate financial support.
“Given that financial literacy is not effectively emphasized in the Nigeria curriculum at the post-basic and tertiary level, most entrepreneurs often struggle with understanding the financial rudiments of running a sustainable business. Most of them cannot do record keeping, cash flow management, preparing projections and taxation,” she said.