FG, Banks Partner on New Funding Mechanism for SMEs

NEWS EXTRA

The Federal Government is partnering commercial banks across the country to fashion out a new funding mechanism that will give SMEs increased access to cheap funds. The Minister of Trade and Investment, Mr. Olusegun Aganga, disclosed this during a meeting with SME Desk Managers of Banks in Abuja.
In attendance at the meeting were the Director-General, Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) , and representatives of commercial banks. Aganga noted  that the new initiative was  aimed at removing barriers  militating against  banks’ lending to MSMEs  as part of  renewed efforts  to increase their capacity to create jobs, generate wealth and transform the country’s economy.
He said, “The rate of unemployment in Nigeria is becoming alarming and staring us in the face. There is no gainsaying the fact that the best way to checkmate the situation is to have a virile Micro, Small and Medium Enterprises sub-sector. The recent survey conducted by SMEDAN, in conjunction with the National Bureau of Statistics, revealed that we have close to 20 million MSMEs  in Nigeria.
“The figure represents over 80 per cent of the total number of enterprises in the country and accounts for 75 per cent of Nigeria’s total employment base. If we don’t create an enabling environment for this important sub-sector to thrive, we will all suffer its negative consequences.”
He added, “The MSME community has been complaining bitterly of not being able to access cheap funds from the banks. They have also said that where services are available, it takes  the banks ‘forever’ to process  them. The vision of the Ministry of Trade and Investment is to increase the contribution of SMEs to the nation’s Gross Domestic Product from 10 per cent to 30 per cent and increase export earnings through SMEs from three per cent to 25 per cent within the lifetime of this administration. “To be able to achieve this, we have identified commercial banks and development finance institutions and are partnering them to come up with SME-friendly products or re-design existing products to enhance access to finance by SMEs.  We want to partner the banks to remove the barriers inhibiting them from lending to SMEs at a reduced interest rate.” Aganga said that SMEDAN was currently carrying out an SME Rating Project to minimise the risks associated with SMEs  by training and re-training them to become more competitive and attractive  for funding by commercial banks.
He noted, “I am aware that banks’ problems with SME operators border on perception of SMEs as high risk largely due to their informal nature; inability to prepare bankable business plans ; poor record keeping and discriminatory cultural practices, among other things. SMEDAN is championing the SME Rating project which will minimise the risks usually associated with the sub-sector.

“Though SMEs are known to be high risk areas, they also hold the key to sustainable banking if properly understood and funded. We are prepared to take up the challenge of training and re-training MSMEs to ensure that they become more competitive and attractive to funding. To this end, SMEDAN is being refocused to constantly monitor and provide business development support services to MSMEs to ensure that they conform with conditions attached to loans.

Sekibo Advocates Protective Strategy for SMEs’ Devt

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The Managing Director of Heritage Bank, Ifie Sekibo, has said that the establishment of a solid framework supported by clearly articulated government policy is the first step in creating an active Small and Medium-scale Enterprises (SME) sector that could spearhead the much needed industrial revolution required in Nigeria and in many African countries.
Sekibo made the submission while speaking at the 2nd US-Africa Trade & Investment Forum/Africa Investment & Development Awards, in New York, USA recently.
He spoke on “Small & Medium Enterprise Funding in Africa – a banker’s experience,” noting that in Sub-Saharan Africa, SMEs are more credit-constrained, which he said typically affects growth possibilities as significantly low number of startups who apply for financing actually succeed.
Studies, he noted, indicate that more than 70 per cent of the SMEs lack access to medium-longer-term finance, creating an SME funding gap of more than $140 billion in Africa alone.
“Using Nigeria as a case study, between 2003 and 2009, SME loans as a percentage of total credit, decreased from 7.45 per cent to 0.18 per cent. Yet by 2012, Nigeria had about 17.6 million Medium and Small and Medium-scale Enterprises (MSMEs) employing about 32.4 million people. Although it is generally accepted that SMEs enhance competition and entrepreneurship, and their development has a positive impact on innovation and productivity growth, policy and infrastructure factors to mitigate risk and costs that SME sector cannot internalise needs to be seriously worked upon by all relevant stakeholders,” he said.
He added that in Nigeria, most SMEs die within the first five years of existence while another smaller percentage goes into extinction between the sixth and tenth year, with only five to 10 per cent surviving, thriving and growing into established corporate status.
He listed the leading cause of such sub-optimal output to include: poor access to funds, weak institutional support, unstable macroeconomics, complicated and unstructured legal framework/regulation, inadequate business information, infrastructure & business environment and human capital factors.
Sekibo, however, lauded the recent response to financing SMEs in Africa by development finance institutions such as the African Development Bank (AfDB), Ecowas Bank for Investment and Development (EBID) and the relatively new African Guarantee Fund, which was officially launched in June 2012, that are engaging partnerships with commercial banks and other SME focused lenders to initiate advisory and innovation interventions to promote diverse SME funding windows.
He said these international finance institutions have a focused intervention fund to enhance international funding access to lending institutions with strategic and demonstrable focus on the SMEs.

“Five out of the top 10 fastest growing economies in the world are in Africa. The 39 fastest growing economies in 2013 have an average size of $78 billion. Growth in these countries is largely driven by Small Growing Businesses (SGBs) such as Agriculture, Solid Mineral, and Retail Distribution. Small is no longer risky, it is the way to building the Next Generation of African Corporates,” he said.

CBN To Quiz Microfinance Banks

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The Central Bank of Nigeria, CBN, is expected to intensify its probe on the activities of Microfinance banks in the country soon.

Sources said the CBN has listed the microfinance banks among the outfits that will be thoroughly investigated and penalised if found guilty of fraudulent activities this year.

The move, our source further said, is coming on the heels of an appeal made by Mr. Olatunde Oladokun, the Executive Director, Self-Reliance Economic Advancement Programme, that the apex bank needs to, as a matter of urgency, arrest the high level of fraud in micro-finance institutions across the country.

Oladokun explained that “The CBN should come up with a policy that will ensure the recordkeeping of all the clients and staff in microfinance banks so that if they go to another MFB, they will be detected.

“CBN should also maintain a data where names of fraudsters will be kept and used for future reference and tracking. This will reduce the rate of fraud in the MFBs. There could be a data base of all the clients to find out fraudulent clients. There should be something that will create fear in the minds of fraudsters so that they will not just come to destroy the sector.

“The sector is like a third-party relationship and the future of this country is uncertain if we do not control fraud in the MFBs. Today, microfinance institutions are facing a lot of challenges. A good example is the dual or multiple memberships maintained by clients, thereby making it difficult for microfinance institutions to know their actual membership.

“It has been observed that some members of staff that have in a way or the other defrauded an organisation are being employed by other non-bank organisations, where they will still defraud such an organisation.

“I am imploring the association of non-banks to come up with strategic measures, such as keeping of records of each staff member of all microfinance institutions within their jurisdiction so as to verify and give a standing order that before any organisation recruits, the association should be copied for reference purposes.”

AVCA Members Invest $10m in SMEs Businesses

Alitheia Capital, a private equity firm based in Nigeria and a member of the African Private Equity & Venture Capital Association (AVCA), has invested $10 million in the past 18 months into the Nigerian Small and Medium Enterprises (SMEs) sector.

AVCA is a non-profit association, which aims to promote, develop and stimulate private equity and venture capital in Africa through research, advocacy, training and networking. AVCA was  established to promote investment in Africa and to play a crucial role in the development of SMEs.

Speaking in Lagos, Co-Founder and Managing Director of Alitheia Capital, and AVCA board member, Ms. Tokunboh Ishmael, said apart from $10 million invested in Nigerian SMEs, the Alitheia also invested $10 million in some SMEs in Ghana as well.

Although she did not mention the particular companies, she noted that the Private Equity community has in excess of 1,000 investments across Africa.

Ishmael, who is also the Chief Executive Officer of Alitheia Capital, said  private equity and venture capital  are very crucial for SME sector finance.

She said: “Private equity and venture capital plays a crucial role in financing the SME sector, which is  the engine of economic growth the world over.”

Speaking in the same vein, the  Chief Executive Officer, African Capital Alliance, Mr Okey Enelamah, said that  his firm’s targets  is unlisted businesses to prepare them for listing.
According to Enelamah AVCA would continue to create an enabling environment to attract capital and investment into Africa.

“AVCA will support local businesses to build their potential, establish strong corporate governance structure to ensure sustainable growth,” he said.
He re-emphasised the mission of AVCA, which is to promote and catalyse the private equity and venture capital industry across Africa.

Speaking on the 11th  annual conference  of AVCA slated for March 31 and April 2, Enelamah said the conference  would offer an opportunity for investors to understand all the reforms in Africa and their investment potentials.

Agriculture Bank Canvasses Amcon’s Coverage of Dfis

The Bank of Agriculture Limited has urged the Asset Management Corporation of Nigeria (AMCON) to expand its programmes to cover the Development Financial Institutions (DFIs).

Mr Waziri Ahmadu, the Executive Director, (Wholesale Finance) Bank of Agriculture Limited, made the call in Abuja. Ahmadu spoke on the sideline of the public hearing on AMCON amendment bill organised by the Senate Committee on Banking, Insurance and other Financial Institutions.

The amendment, essentially, seeks to create a Sinking Fund or Resolution Cost Fund to cover any shortfall that may be needed to meet AMCON’s responsibility to redeem its debt securities.

He said that the non-oil sector of the economy has been making significant contributions to the growth of the Gross Domestic Product (GDP) of Nigeria’s economy by creating employment.

He said it is imperative for AMCON to help in clearing the liabilities of the DFIs to enable them provide financial support to agriculture, infrastructural development and Small and Medium Enterprises (SMEs).

“The Deposit Money Banks (DMBs) don’t lend much to the non-oil sectors of the economy. They don’t lend much to agriculture, infrastructure development and development and growth of SMEs. So, if AMCON should widen its scope of coverage to include the DFIs, they would have more access to new investments.

“They will also have new financial resources and be able to increase their lending to the real sectors of the economy. Since AMCON is there to alleviate the liquidity problems of different financial institutions, then they should be working with us (DFIs).

“They should be accepting our toxic assets and giving us the fresh air that they gave to DMBs,” he said. Earlier, the Senate President, Sen. David Mark, represented by the Senate Leader, Sen. Victor Ndoma-Egba, urged the committee to consult widely to achieve a result that would be acceptable by all.

Mark advised the committee to use the public hearing to “generate authentic information that will enhance and guide the Legislature in its legislative actions. You should try to make further wide-ranging consultations with various key institutions and stakeholders in the sector, including policy makers, other legislators and members of the public,” he said.

The Chairman, Senate Committee on Banking, Insurance and other Financial Institutions, Sen. Bassey Otu, said the amendment would help AMCON to reduce the volume of non-performing loans. Otu said the committee would not relent in its efforts to gather relevant information from experts and industry operators to assist it in achieving an acceptable outcome

Five Ways To Grow Your Business Without Adding More Resources

Five Ways To Grow Your Business Without Adding More Resources 

Everyone in business today is being asked to do more with less. There is constant pressure to improve performance, maintain growth and beat the numbers. From large multinationals to independent contractors, increasing efficiency is top priority. Here are five tips that you will help you grow your business, without adding more overhead:

Automate tasks with software. Lots of tools are now available that allow for many manual tasks to be automated. For example, social media management tools such as Buffer or HootSuite let you queue up content and have it post automatically. They also let you manage social media as a team, instead of as individuals. Most blogging software also has similar functions. Set up content to post in advance, which frees you up to focus on generating new material.

Email marketing can also easily be automated. Low-priced software from vendors such as Hubspot and Marketo allow small companies to build automated customer relationship management systems that rival the sophistication of what Amazon has had for years.

Consider what other tasks you can automate, such as billing or accounting. Even public relations teams can set up daily searches to look for relevant articles based on keywords, instead of reading each headline one by one.

Focus on scalable channels and ignore everything else. Email is still the most cost-efficient and scalable channel. Every organization should have an email strategy. Even the smallest retailer can effectively use email to drive additional in-store traffic or online sales. Digital advertising and social media are also scalable and both require very little money to get started. While it does take time and effort to build a social media following, once you have it in place, it’s powerful and effective.

Door-to-door selling, cold calling and other traditional methods of sales are not scalable. Instead of adding headcount to sales, focus on giving your sales team more warm leads to follow up on. Make the sales team more efficient, rather than larger.

Build your business through referrals. Referrals are a simple way to grow a business. Asking customers for referrals directly is low-hanging fruit that everyone should take advantage of. But why stop there? It’s simple to develop a rewards system to encourage customer referrals. This is a popular technique with many retailers and consumer brands. But business-to-business companies can also adopt this by providing incentives or rewards to customers for referrals or loyalty.

The absolute best way to accomplish this though is to incorporate sharing into your product. This approach has been exploited over and over again by many Silicon Valley companies such as Facebook, Dropbox, AirBnB or even Yelp. Their products require them to be shared in order to be used effectively.

Be an efficient leader and project manager. Effectively managing your own time is another key area that will help you improve the overall efficiency of your business. Focus on efficient business communications by training people to contact you by email instead of by phone. Why? Email is searchable, scalable, documented, available 24/7 in the cloud and there are a host of productivity tools available to become even more effective with it.

Become a planing ace, and schedule your entire week in advance. In order to be effective at this, your calendar must be sacrosanct. If it’s not on your schedule, then the meeting shouldn’t take place. This takes discipline to implement. Be polite but firm with people and they will respect it and get on board. Another great tip is to utilize cloud-based tools such as Dropbox, Google Docs, Asana, Basecamp and Box. This will allow you to easily share important documents with people and work collaboratively. With all your files in the cloud, you can work anywhere at anytime, even without your workstation.

Don’t aim for perfection. Be smart when implementing any of these ideas. Find small opportunities to test and learn as you go. Some of these ideas will require a significant amount of investment, social media for example, before it will yield measurable results. That doesn’t mean you should give up on it, it means that you need to invest in multiple areas at the same time. Scale the ones that show results and nurture the other ones.

Aim to improve the quality over the long term by making each iteration slightly better. Don’t worry about getting it right on the first try — you won’t. It’s repeated often in my office that the first iPhone shipped without a copy/paste function, and that didn’t stop Apple from launching it. When in doubt, just remember what’s painted in the hall at Facebook: “Done is better than perfect.”

NEWS FLASH

Rice Farming in Nigeria is a Golden Investment Opportunity 

The season for Rice Farming is here again, the rain has started in major parts of Nigeria where there are suitable soil for Rice Farming. If you live within areas that has plenty of swampy lands, then you are in for good business this season. I have seen plenty of swamp even in Lagos that I think will be very good for rice production. Why not try it? Investments is about taking chances and grabbing opportunities, and rice farming is one viable investment any serious investor must not look down on going by the potential for productivity and profits.

One of the things very good about rice farming is that it take less that four months between planting and harvesting. Therefore, whatever amount you invested now, you’re sure of your return within the next four months, guaranteeing the possibility for your quick loan repayments if you take loans to invest in rice farming.

As part of the government’s efforts to ensure adequate food supply to her citizens, Rice farming is also one of those farm investments government is willing to support by borrowing money and logistics to any farmer who is willing to  embark on it, which is a very great advantage for a would be Rice Farmer.

Rice farming is straight forward and requires not much expertise, anyone can cultivate and harvest rice, irrespective of your experience and background in rice farming. Rice is a very high yield crop, one Acre of rice farm is capable of producing over 100 bags of rice. All you need to make it happen is

(a) A very good swampy, less acidic land

(b) High yield verity of rice specie

(c) The right fertilizer and proper application

(d) Good weed control at the proper time

(e) And early planting…

Put these in place and you’re in for a hit!

Rice is a very fast selling farm produce, you don’t have to wait for months or years before you could sell. It sells so fast that everything could be disposed right at the farm except you want to process or stock it. This is the reason why rice farming is a ‘Get Rich Quick Farming’.

Rice is by far the most consumed food staple in Nigeria, a country of over 150million people. It can be prepared in various forms like: The popular White Rice and stew,  Jollof rice, Pounded rice, etc.  You simply can not doubt the usefulness of rice in this country and around the world. Now, if you are willing to go into it, here are the step by step how to cultivate and harvest your rice produce. Feel free to ask question or add anything you think is missing by making a comment.



1. Select the Healthy Rice Seeds – The healthier the seeds, the higher it will produce. Look for the improved verity and do the seed selection, don’t just plant the seeds indiscriminately, discriminate among the seeds and go for the best. Good rice production practice requires that you manually select the seeds. Lack of seed selection is one major reason why local farmers produces very little.

If you select the best of rice seeds, your harvest would be well worth the time and energy invested in selecting the seeds. But if you neglect this! Well, good luck for you gamble.

2. Raise Rice Seedlings in a Nursery -  Prepare the seedbed and plant the seed there first to grow in a nursery. Solarize The Soil if you can – Soil solarization simply is the method of heating the soil by covering it with transparent polythene sheet in other to control soil borne diseases. Because, many soil borne pathogens and nematodes attack transplanted rice leaving it with low yield.

It has also been shown that Rice yield always increases by about 36% by using solarization technique to raise the seedlings. Again, transplanted rice matures to harvest faster than non transplanted. After two to three weeks, your seedling will be ready for transplant.

3. Look for a Swampy Land – Swampy land saves you the capital and stress of irrigation. Although rice can be planted in both upland dry condition and lowland swamp and irrigated, but it has been shown that rice produces more on lowland swamp or irrigated soil. So, go for swampy land. Get the land prepared by clearing and using Tractors to properly till the soil surface in readiness for the actual transplanting of your rice seedling.

4. Manage the Weeds and Soil Nutrients – After two months of transplanting, the rice farm would be due for weed control, then it will be time to moderately apply herbicide to kill off the weeds. Some people apply Herbicide twice before harvest. Fertilizer is applied in about a month after the transplant. Use the right type of fertilizer (Organic fertilizer) and apply by spraying within the plant field with the right quantity.

5. Harvest Your Crop – Within the 4months of planting, your crop will be ready for harvest. When matured, the color of the rice will change from green to light brown. Then, you know your crop is ready for harvest.

You’d need to move in and harvest you crop very fast to avoid it being eaten up by pests as so many animals feed on the rice seed. Please you’ll need to learn a lot about the pest control.

Whatever effort and money you put into the farm, be assured that within five months you’ll be smiling to the bank.