Businesses seek alternative capital sources amid rising interest rate

<p>Due to the challenging operating environment, businesses are having difficulty staying afloat. Additionally, the current economic situation in the country has further worsened access to funds. In this piece, ANOZIE EGOLE examines alternative funding sources that small businesses could explore in light of the increasing interest rate</p>, <p>Access to funds has always been a major challenge to Nigerian businesses, especially Micro, Small and Medium Enterprises. The country’s inflation has worsened the situation, forcing the Central Bank of Nigeria to dramatically increase the benchmark interest rate from 11.5 per cent in 2021 to 18.5 per cent as of July 2023.</p>, <p>Before the CBN raised the lending rate from 18 per cent to 18.5 per cent in July, banks were charging over 30 per cent interest on loans per annum.</p>, <p>Experts have argued that collecting bank loans is suicidal for small businesses, because of the high interest rates they have to pay, especially in the face of the country’s economic crunch.</p>, <p>In a recent report, the Nigeria Employers Consultative Association highlighted the burdens faced by organised businesses as a result of the increasing cost of living, which was caused by the hike in the price of Petroleum Motor Spirit and the devaluation of the naira.</p>, <p>The Director-General of NECA, Mr Adewale-Smatt Oyerinde, urged the government to take more drastic steps to stop the slide into hopelessness for organised businesses and Nigerians in general.</p>, <p>Oyerinde expressed concerns that the rising cost of living was already hurting Nigeria’s poverty and production index.</p>, <p>In the previous year, he said, the country witnessed perpetual rising inflation, commodity price instability, reduced industry capacity utilisation, and a gradual dwindling of the purchasing power of Nigerians.</p>, <p>Oyerinde also warned that the country’s accelerating inflation, if not controlled may hit 25 per cent before the end of the year.</p>, <p>His concern like most entrepreneurs in the country was