Minister For Steels And Mine Development Discloses That Gold Will Be Used As Collateral For Loans

Minister of Mines and Steel Development, Olamilekan Adegbite disclosed on Sunday that his ministry was in discussions with Nigerian banks, and business owners, especially those who are owners of small and medium enterprises, will soon be able to use gold as collateral to obtain loans from banks.

The minister said that his ministry is committed to creating more access to opportunities for Nigerians, especially SME owners, as well as provide a boost to the industry.

SMEs are small and mid-size businesses that maintain revenues, assets, and the number of employees under a certain range. In Nigeria, they have a maximum asset base of N500 million exclusive of land and working capital. Their labor size also constitutes not less than 10 and not more than 300 employees.

Small enterprises are classified as those with a total capital base of over N1.5 million but under N500 million and a workforce of 11 to 100 workers, while medium enterprises are those with capital bases of above N50 million but under N500 million and a workforce of 101 to 300 workers. All SMEs operating in Nigeria are also required to operate under the legal system which regulates their operations.

According to a report by the PWC, Small and medium enterprises contribute 48 percent of national GDP and account for 84 percent of employment and 96 percent of businesses. With a total number reaching 17.4 million, SMEs account for 50 percent of industrial jobs and about 90 percent of the manufacturing industry.

However, despite their noteworthy contribution to the country's economy, the sector faces a lot of challenges that obstruct growth and development. Some of these challenges include high costs of business, lack of skilled manpower, too many taxes, and lack of access to funding as collateral requirements are difficult to meet.

The proposed collateral in gold will be useful in boosting the SME sector. Following the agreement, small and medium businesses will now receive certificates from banks after handing in their gold jewelry, which can be used to apply for loans.

Gold prices in Nigeria are currently N20,992 per gram and N650,750 for an ounce. It is a good idea for trade as it's known for retaining its value even after years. It is also a popular means of exchange in Nigeria.