Dr. Kabir Dodo Urges Nigerian Banks to Adopt No-Collateral Loan Method to Empower MSMEs
By Ujunwa Eunice Nwankwo
Renowned Nigerian businessman, Dr. Kabir Dodo, has called on Nigerian banks to reform their loan policies by adopting a no-collateral approach, similar to practices in developed nations such as the United States and the United Kingdom.
Speaking during the Development Bank of Nigeria’s annual lectures held in Abuja, Dr. Dodo emphasized the need to support Micro, Small and Medium Enterprises (MSMEs) and entrepreneurs with easier access to funding in order to boost economic growth and development.
He noted that developed countries have long supported their small business sectors by offering collateral-free loans, a strategy that has significantly contributed to their national development.
Dr. Dodo believes that Nigeria can achieve similar growth if financial institutions shift their focus from collateral to the potential and seriousness of business ventures.
“Banks in countries like the US and UK offer loans to businesses without demanding collateral, and this has helped grow their economies. Nigeria can do the same if MSMEs demonstrate genuine commitment to expanding their businesses,” he said.
Dr. Dodo also advocated for the establishment of monitoring and supervision teams to ensure that loans, once disbursed, are effectively utilized to achieve their intended purpose.
Expressing concern, he highlighted how many business owners in rural communities—especially farmers—are excluded from financial support due to the strict collateral requirements.
He lamented that these individuals, despite owning vast and productive farmland, are often left out because they lack bank accounts and other formal financial documentation.
“Many rural farmers do not have bank accounts but have extensive farmland that could yield significant profit if properly supported. Banks can begin by helping them open accounts, visiting their farms, and ensuring that the loans are put to good use,” he explained.
In his closing remarks, Dr. Dodo urged Nigerian banks and investors to look beyond collateral and recognize the long-term benefits of investing in the MSME sector. He emphasized that empowering small businesses is key to national development and prosperity.
“We must come together to empower MSMEs. The collateral system scares entrepreneurs away. If we truly want to develop this nation, we must change our approach and build a system based on collaboration and trust,” he concluded
